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How do low-carbon city pilots affect carbon emissions? Staggered difference in difference evidence from Chinese firms

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  • Hou, Xiang
  • Hu, Qianlin
  • Liang, Xin
  • Xu, Jingxuan

Abstract

We employ firm-level tax survey data and a staggered difference-in-differences to evaluate how China’s low-carbon city pilots (LCCP) affects CO2 emissions. Results show a 30% reduction in emissions and a 36% improvement in energy efficiency. The LCCP highly targeted high-emission and low-efficiency firms, reducing CO2 emissions by 79%, and increased loans only to high-carbon and low-efficiency, state-owned and collective, and small firms. Our results indicate that the decline in emissions cannot be solely attributed to financial incentives, the environmental regulations also played a role in facilitating firms’ green transition. The findings provide recommendations for other developing countries aiming to lower their CO2 emissions.

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  • Hou, Xiang & Hu, Qianlin & Liang, Xin & Xu, Jingxuan, 2023. "How do low-carbon city pilots affect carbon emissions? Staggered difference in difference evidence from Chinese firms," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 664-686.
    • Handle: RePEc:eee:ecanpo:v:79:y:2023:i:c:p:664-686
    DOI: 10.1016/j.eap.2023.06.030
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