Carbon regulation and enterprise investment: Evidence from China

Zhenbing Yang, Ziyi Zhao, Shuai Shao and Lili Yang

Energy Economics, 2023, vol. 128, issue C

Abstract: Enterprises' investment response to China's carbon regulation policy is essential to the country's high-quality development. Using a difference-in-differences model, we investigate the differential impacts of China's Low-carbon Pilot (LP) program on both state-owned enterprises (SOEs) and non-SOEs, in order to reveal the differences in response to government intervention. The results show that the LP program has a negative effect on the productive investments of non-SOEs, but SOEs show unclear effect from the LP program. This conclusion remains credible after robustness tests. The negative impact of the LP program on the productive investments of non-SOEs is particularly evident in carbon-intensive sectors and large enterprises; investment diminishes in correlation with increases in the carbon intensity reduction targets. China's LP program is found to cause a decrease in the available credit resources and an increase in financing costs, in addition to a loss of technical efficiency and a reduction in investment willingness for non-SOEs, resulting in reduced productive investments.

Keywords: Carbon regulation policy; Low-carbon pilot program; Productive investment; Difference-in-differences method; Carbon intensity reduction targets (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:128:y:2023:i:c:s0140988323006588

DOI: 10.1016/j.eneco.2023.107160

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