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Green fiscal policy and carbon emission: Enterprises’ level evidence from China

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  • Lee, Chien-Chiang
  • Wang, En-Ze
  • Tang, Huimin

Abstract

The Chinese government has systematically developed and implemented a wide-ranging set of policies for sustainable development. The Fiscal Policy for Energy Conservation and Emission Reduction (FPECER) is a pivotal component within this integrated policy framework. Nevertheless, there is currently an absence of literature assessing its' impact on the carbon emission performances of manufacturing enterprises and discussing the potential impact channels. To this end, by applying the difference-in-difference method to a unique micro-level panel dataset, this study empirically investigates the impact of FPECER on manufacturing enterprises' carbon emissions and proposes some explanations for the impact channels between the two. This research substantiates that the FPESER has played a pivotal role in diminishing both the levels and intensity of carbon emissions for manufacturing enterprises located in pilot cities. Moreover, this has been achieved through an augmentation of financial subsidies granted to enterprises, a vigorous promotion of research and development activities, and a significant reduction in both the level and intensity of energy consumption. Furthermore, this research also discerns that the negative impact of FPECER on carbon emission performance is more pronounced for manufacturing enterprises in regions experiencing heightened local fiscal pressure and higher economic policy uncertainty, those classified within high-emission and capital-intensive industries, as well as non-export-oriented and state-owned manufacturing entities. Finally, FPECER does not significantly impact the output and value-added of enterprises, yet it does reduce the emission levels of a range of pollutants.

Suggested Citation

  • Lee, Chien-Chiang & Wang, En-Ze & Tang, Huimin, 2024. "Green fiscal policy and carbon emission: Enterprises’ level evidence from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 203(C).
    • Handle: RePEc:eee:rensus:v:203:y:2024:i:c:s1364032124005215
    DOI: 10.1016/j.rser.2024.114795
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