Complement or Crowd Out? The Impact of Cross-Tool Carbon Control Policy Combination on Green Innovation in Chinese Cities

Jun Shen, Jiana He (), Xiuli Liu and Qinqin Shi
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Jun Shen: Collaborative Innovation Center for Resource-Based Economy Transformation, Shanxi University of Finance and Economics, Taiyuan 030006, China
Jiana He: Collaborative Innovation Center for Resource-Based Economy Transformation, Shanxi University of Finance and Economics, Taiyuan 030006, China
Xiuli Liu: Collaborative Innovation Center for Resource-Based Economy Transformation, Shanxi University of Finance and Economics, Taiyuan 030006, China
Qinqin Shi: Collaborative Innovation Center for Resource-Based Economy Transformation, Shanxi University of Finance and Economics, Taiyuan 030006, China

Sustainability, 2025, vol. 17, issue 15, 1-26

Abstract: In order to fulfill the commitment to the “dual carbon goal” at an early date, China has implemented a series of carbon control policies. However, the actual impact of these policy combinations on green innovation in Chinese cities remains unknown. Taking the implementation of the low-carbon pilot policy (LCP) and the carbon emission trading pilot policy (CET) as the research opportunity, this paper uses panel data from 276 prefecture-level cities and a multiple-period difference-in-differences (DID) model to explore the impact of carbon control policy combination on green innovation in China and their mechanisms. The results indicate the following: A single LCP or CET can significantly boost green innovation. However, the impact of cross-tool carbon control policy combination on green innovation is notably greater than that of a single policy, with a trend of increasing effectiveness over time. Even after a series of robustness tests, this conclusion remains valid. Heterogeneity analysis shows that the promotion effect is more significant in the eastern region and high-level administrative cities. The policy combination incentivizes green innovation through fiscal technology expenditure and public environmental awareness, focusing more on fostering strategic green innovation. Consequently, the Chinese government should tailor policy combinations to specific contexts, expand their implementation judiciously, and consistently drive forward green innovation.

Keywords: carbon control policy; cross-tool policy combination; green innovation; sustainable city development (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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