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

Xiang Hou, Qianlin Hu, Xin Liang and Jingxuan Xu

Economic Analysis and Policy, 2023, vol. 79, issue C, 664-686

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.

Keywords: Low-carbon city pilots (LCCP); CO2 emissions; Financial incentives; Staggered DID (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:79:y:2023:i:c:p:664-686

DOI: 10.1016/j.eap.2023.06.030

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