Energy efficiency suppression and spatial spillover effect: a quasi-natural experiment based on China’s environmental protection tax law

Shiqin Su () and Siying Li ()
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Shiqin Su: Wuhan University
Siying Li: Wuhan University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2025, vol. 27, issue 3, No 31, 6397-6422

Abstract: Abstract The environmental protection tax law (EPTL) is China’s inaugural formally legislated market-based environmental tax regime. Whether the EPTL can improve green total factor energy efficiency (GTFEE) is of great importance for China’s sustainable development. Utilizing a sample of China’s 284 prefecture-level cities from 2015 to 2019 and the difference-in-differences method, this study explores the impact of China’s environmental protection tax law (EPTL) on green total factor energy efficiency (GTFEE). Results show that: (1) The EPTL exerts a significant negative impact on GTFEE, a conclusion reinforced by a series of robustness checks; (2) two potential mechanisms are reduced green technology innovation and shifted industrial structure; (3) heterogeneity analysis underscores that the negative effects are more significant in eastern regions, old industrial cities, and cities under high fiscal pressure; and (4) based on the spatial difference-in-differences method, the subsequent analysis reveals a negative spatial spillover effect of the EPTL on GTFEE of neighboring cities. Derived from the above conclusions, this study provides policy recommendations for the long-term formulation of the EPTL.

Keywords: Environmental protection tax law; Green total factor energy efficiency; Difference-in-differences method; Spatial spillover effect (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10668-023-04146-4

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