Green manufacturing pioneers: Unveiling the carbon dioxide reduction effect of China's green factories

Shengming Hu, Lanlan Cao, Yanli Shi and Hui Wang

Economic Analysis and Policy, 2025, vol. 85, issue C, 1645-1662

Abstract: Unlike existing studies that primarily center on mandatory environmental policies, this study investigates the environmental impact of green manufacturing (GM) within the framework of voluntary policies, emphasizing its dual role in both incentivizing and constraining firms. This study leverages the Green Factory Policy and employs a staggered difference-in-differences model to analyze GM's impact on corporate CO₂ emissions and its underlying mechanisms. Results show that GM reduces CO2 emissions per unit of revenue and per capita by 10.07% and 8.84%, respectively. Mechanism analysis reveals that GM reduces CO₂ emissions through green innovation, energy optimization, and enhanced energy efficiency. Heterogeneity analysis further reveals that the CO2 reduction effect is significant only for firms with high financing constraints, high human capital, and large scale. Additionally, standardized evaluation criteria and dynamic regulatory oversight are shown to strengthen GM's impact. Moreover, GM generates forward spillover effects, significantly reducing downstream customers’ CO2 emissions. This research advances the understanding of production innovation and environmental protection, offering practical insights for improving the GM system and advancing sustainable development.

Keywords: Green manufacturing; Green factories; CO₂ emissions; Supply chain spillover (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:85:y:2025:i:c:p:1645-1662

DOI: 10.1016/j.eap.2025.02.016

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