Do stringent environmental regulations help improve the total factor carbon productivity? Empirical evidence from China’s industrial sectors

Wei Hu and Zhenxing Xiong

Applied Economics, 2021, vol. 53, issue 55, 6398-6411

Abstract: How can China fully use the limited carbon emission space to achieve the dual goal of stable economic growth and a gradual decline in carbon emissions under increasingly severe global climate change? To address this issue, this paper incorporates the carbon emission space as a production factor into the total factor analysis framework and discusses how environmental regulations affect the total factor carbon productivity. The conclusions reveal that the current environmental regulations have a direct effect on improvement in the total factor carbon productivity of industrial sectors. Environmental regulations also have an indirect effect on the total factor carbon productivity that is mainly achieved through the energy structure and technological advancement. The results of the additional analyses show that these direct and indirect effects have threshold characteristics. Increasing the total factor carbon productivity is beneficial only when the environmental regulation intensity, energy structure and technological level are within a reasonable threshold range. Therefore, the environmental regulation intensity, energy structure conditions and technological level need to be considered when environmental regulations are relied upon to improve the total factor carbon productivity.

Date: 2021
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DOI: 10.1080/00036846.2021.1940083

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