Impact of Venture Capital on Urban Carbon Emissions: Evidence from the Yangtze River Delta Urban Agglomeration in China

Lijiali Huang, Xueqiong Wang, Yanwen Sheng and Jinli Zhao ()
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Lijiali Huang: College of Geography and Environment, Shandong Normal University, Jinan 250358, China
Xueqiong Wang: College of Geography and Environment, Shandong Normal University, Jinan 250358, China
Yanwen Sheng: College of National Park and Tourism, Central South University of Forestry and Technology, Changsha 410004, China
Jinli Zhao: College of Geography and Environment, Shandong Normal University, Jinan 250358, China

Sustainability, 2025, vol. 17, issue 2, 1-25

Abstract: Venture capital is vital for developing capital markets and the low-carbon transformation of the economy. We used panel data from 27 cities in the Yangtze River Delta urban agglomeration from 2011 to 2022 to investigate how the scale and structure of venture capital influence the intensity of urban carbon emissions using spatial econometric models. We show that an increase in the scale of venture capital can inhibit the increase in the intensity of urban carbon emissions, and the effect is more pronounced in cities with higher pollution and better geographical location. Heterogeneity exists in the carbon-reduction effects of venture capital across industries. The direct carbon reduction effect of venture capital flowing to mid- and low-end industries is stronger and more prominent in cities with higher pollution and less favourable geographical locations. The long-term carbon reduction effect of venture capital flowing to high-end industries is stronger. The mediating effect of technological innovation is prominent, while the effect of industrial structure upgrade is not prominent. The enterprises’ willingness and ability to engage in green transformation acts as a positive moderator, whereas the positive moderating effect of the government in that respect is insufficient. This study clarifies the mechanism of venture capital on urban carbon emissions and offers valuable insights for optimising the structure and system of venture capital.

Keywords: venture capital; capital scale; capital structure; urban carbon emissions; heterogeneity effect; mediation effect; moderation effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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