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Green Paradox or Forced Emission Reduction—The Dual Effects of Environmental Regulation on Carbon Emissions

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  • Kedong Yin

    (Institute of Marine Economy and Management, Shandong University of Finance and Economics, Jinan 250014, China
    School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China)

  • Lu Liu

    (School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China)

  • Haolei Gu

    (School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China)

Abstract

In response to global climate change, China made a commitment about carbon emissions at the UN General Assembly. It will strive to achieve carbon peaking by 2030 and carbon neutrality by 2060. To help China successfully meet its carbon emissions targets this study examines the impact of environmental regulation on carbon emissions from a different perspective. Using panel data from 30 provinces in China as samples, this paper discusses the direct and indirect effect of environmental regulation on carbon emissions and explains the indirect process through four transmission paths: energy consumption structure, industrial structure, technological innovation, and foreign direct investment (FDI). The empirical results show that the direct effect of environmental regulation on carbon emissions presents an inverted U-shaped curve, it means that when the intensity level of environmental regulation is low, it mainly shows the green paradox effect, and with the continuous tightening of environmental laws, it turns into a forced emission reduction on carbon emissions. In addition, we found that under the constraint of environmental regulation conditions, the coal-based energy consumption is still the leading cause of carbon emissions; environmental regulations have contributed to the upgrading of industrial structure and technological advance, which indirectly play a positive role in carbon emission reduction. However, environmental regulation restrains the spillover effect and capital accumulation effect of FDI, which brings a specific degree of hindrance to technological progress and economic development, and is not conducive to carbon emission reduction. Therefore, we have made the following recommendations: China should make reasonable use of environmental policies to regulate carbon emissions according to the situation of each region, optimize the energy structure and increase the proportion of clean energy use, and improve the technology level of related industries to reduce carbon emissions by innovation.

Suggested Citation

  • Kedong Yin & Lu Liu & Haolei Gu, 2022. "Green Paradox or Forced Emission Reduction—The Dual Effects of Environmental Regulation on Carbon Emissions," IJERPH, MDPI, vol. 19(17), pages 1-15, September.
    • Handle: RePEc:gam:jijerp:v:19:y:2022:i:17:p:11058-:d:906190
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    2. Godwin Imo Ibe & Hillary Chijindu Ezeaku & Itiri Idam Okpara & Eze Festus Eze & Ebele Igwemeka & Obinna Ubani, 2024. "Asymmetric effect of environmental tax on CO2 emissions embodied in domestic final demand in South Africa: A NARDL approach," African Development Review, African Development Bank, vol. 36(1), pages 55-69, March.
    3. Duyun Peng & Xiaoyu Liu & Koji Shimada, 2024. "The effects of green finance, environmental tax and industrial ecologicalization towards carbon neutrality targets in China: evidence from autoregressive distributed lag-error correction model," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(10), pages 26237-26261, October.
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    9. Ai, Hongshan & Tan, Xiaoqing & Zhou, Shengwen & Zhou, Yuhan & Xing, Hongye, 2023. "The impact of environmental regulation on carbon emissions: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1067-1079.
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