Impact of green fiscal policy on the collaborative reduction of pollution and carbon emissions: Evidence from energy saving and emission reduction policy in China
DOI:
https://doi.org/10.24136/oc.3159Keywords:
green fiscal policy, collaborative reduction of pollution and carbon emissions, energy saving and emission reduction policyAbstract
Research background: Since China is facing the dual challenges of environmental pollution and climate change, how to effectively deal with the collaborative reduction of pollution and carbon emissions (CRPCE) has become an important problem. Energy saving and emission reduction fiscal policy (ESER), as a green fiscal policy, plays an important role in solving China's environmental problems.
Purpose of the article: The aim of this study is to analyze the direct impacts, mechanisms and spatial spillover effects of the ESER policy on the CRPCE through theoretical and empirical analyses, thereby providing practical and feasible fiscal-related policy proposals for developing countries like China to achieve low-carbon development.
Methods: Difference-in-differences method (DID), spatial DID.
Findings & value added: Based on panel data from 274 Chinese cities, this study analyzes the impact of ESER policy on the CRPCE. The findings demonstrate that the ESER policy effectively enhances the CRPCE. The mechanism analysis demonstrates that the impact of the ESER policy is realized by promoting green technology innovation, improving energy efficiency, and increasing industrial structure upgrading. The heterogeneity analysis demonstrates that the ESER policy can be more effective in enhancing the CRPCE when it is implemented in northern, resource-based, and high fiscal self-sufficiency cities. The spatial analysis results suggest that ESER policy attenuates the CRPCE of neighboring cities. In addition, the co-implementation of the ESER policy and the innovation policy is more effective in enhancing the CRPCE, but cities are required to implement the innovation policy first. This study broadens the research perspective on the synergistic effects of green fiscal policy in reducing pollutant and carbon emissions, and offers a useful guide for other developing countries on green fiscal policy.
Downloads
References
Acemoglu, D., Aghion, P., Bursztyn, L., & Hemous, D. (2012). The environment and directed technical change. American Economic Review, 102(1), 131–166. DOI: https://doi.org/10.1257/aer.102.1.131
View in Google Scholar
Angrist, J. D., & Pischke, J. S. (2009). Mostly harmless econometrics: An empiricist's companion. New Jersey: Princeton University Press. DOI: https://doi.org/10.1515/9781400829828
View in Google Scholar
Bai, J., Lu, J., & Li, S. (2019). Fiscal pressure, tax competition and environmental pollution. Environmental and Resource Economics, 73(2), 431–447. DOI: https://doi.org/10.1007/s10640-018-0269-1
View in Google Scholar
Bai, T., Xu, D., Yang, Q., Piroska, V. D., Dávid, L. D., & Zhu, K. (2023b). Paths to low-carbon development in China: The role of government environmental target constraints. Oeconomia Copernicana, 14(4), 1139–1173. DOI: https://doi.org/10.24136/oc.2023.034
View in Google Scholar
Bertrand, M., Duflo, E., & Mullainathan, S. (2004). How much should we trust differences-in-differences estimates?. Quarterly Journal of Economics, 119(1), 249–275. DOI: https://doi.org/10.1162/003355304772839588
View in Google Scholar
Chang, K., Xue, C., Zhang, H., & Zeng, Y. (2022). The effects of green fiscal policies and R&D investment on a firm’s market value: New evidence from the renewable energy industry in China. Energy, 251, 123953. DOI: https://doi.org/10.1016/j.energy.2022.123953
View in Google Scholar
Dinu, V., Dragoş, C. M., Mare, C., Dragoş, S. L., & Mare, R. (2024). Economic and institutional determinants of environmental health and sustainability: Spatial and nonlinear effects for a panel of worldwide countries. Oeconomia Copernicana, 15(1), 195–227. DOI: https://doi.org/10.24136/oc.2915
View in Google Scholar
Dong, Z., Xia, C., Fang, K., & Zhang, W. (2022). Effect of the carbon emissions trading policy on the co-benefits of carbon emissions reduction and air pollution control. Energy Policy, 165, 112998. DOI: https://doi.org/10.1016/j.enpol.2022.112998
View in Google Scholar
Du, Z., & Wang, Y. (2022). Does energy-saving and emission reduction policy affects carbon reduction performance? A quasi-experimental evidence in China. Applied Energy, 324, 119758. DOI: https://doi.org/10.1016/j.apenergy.2022.119758
View in Google Scholar
Elshamy, H. M., & Ahmed, K. I. S. (2017). Green fiscal reforms, environment and sustainable development. International Journal of Applied Economics, Finance and Accounting, 1(1), 48–52. DOI: https://doi.org/10.33094/8.2017.11.48.52
View in Google Scholar
Fan, F., & Zhang, X. (2021). Transformation effect of resource-based cities based on PSM-DID model: An empirical analysis from China. Environmental Impact Assessment Review, 91, 106648. DOI: https://doi.org/10.1016/j.eiar.2021.106648
View in Google Scholar
Fan, H., & Liang, C. (2023). The pollutant and carbon emissions reduction synergistic effect of energy fiscal policy: Evidence from China. Finance Research Letters, 58, 104446. DOI: https://doi.org/10.1016/j.frl.2023.104446
View in Google Scholar
Fang, G., Chen, G., Yang, K., Yin, W., & Tian, L. (2023). Can green tax policy promote China’s energy transformation?—A nonlinear analysis from production and consumption perspectives. Energy, 269, 126818. DOI: https://doi.org/10.1016/j.energy.2023.126818
View in Google Scholar
Feldman, M. P., & Kelley, M. R. (2006). The ex ante assessment of knowledge spillovers: Government R&D policy, economic incentives and private firm behavior. Research Policy, 35(10), 1509–1521. DOI: https://doi.org/10.1016/j.respol.2006.09.019
View in Google Scholar
Feng, S., Zhang, R., & Li, G. (2022). Environmental decentralization, digital finance and green technology innovation. Structural Change and Economic Dynamics, 61, 70–83. DOI: https://doi.org/10.1016/j.strueco.2022.02.008
View in Google Scholar
Goodman-Bacon, A. (2021). Difference-in-differences with variation in treatment timing. Journal of Econometrics, 225(2), 254–277. DOI: https://doi.org/10.1016/j.jeconom.2021.03.014
View in Google Scholar
Gramkow, C., & Anger-Kraavi, A. (2018). Could fiscal policies induce green innovation in developing countries? The case of Brazilian manufacturing sectors. Climate Policy, 18(2), 246–257. DOI: https://doi.org/10.1080/14693062.2016.1277683
View in Google Scholar
Grossman, G. M., & Krueger, A. B. (1995). Economic growth and the environment. Quarterly Journal of Economics, 110(2), 353–377. DOI: https://doi.org/10.2307/2118443
View in Google Scholar
Guliyev, H. (2020). Determining the spatial effects of COVID-19 using the spatial panel data model. Spatial Statistics, 38, 100443. DOI: https://doi.org/10.1016/j.spasta.2020.100443
View in Google Scholar
Guo, Q., Wang, Y., & Dong, X. (2022). Effects of smart city construction on energy saving and CO2 emission reduction: Evidence from China. Applied Energy, 313, 118879. DOI: https://doi.org/10.1016/j.apenergy.2022.118879
View in Google Scholar
Heckert, M., & Mennis, J. (2012). The economic impact of greening urban vacant land: A spatial difference-in-differences analysis. Environment and Planning A: Economy and Space, 44(12), 3010–3027. DOI: https://doi.org/10.1068/a4595
View in Google Scholar
Hu, J. (2023). Synergistic effect of pollution reduction and carbon emission mitigation in the digital economy. Journal of Environmental Management, 337, 117755. DOI: https://doi.org/10.1016/j.jenvman.2023.117755
View in Google Scholar
Hu, Y., Ding, Y., Liu, J., Zhang, Q., & Pan, Z. (2023). Does carbon mitigation depend on energy fiscal policy or green investment?. Environmental Research Letters, 18(4), 045005. DOI: https://doi.org/10.1088/1748-9326/acc4df
View in Google Scholar
Huang, H., Hong, J., Wang, X., Chang-Richards, A., Zhang, J., & Qiao, B. (2022). A spatiotemporal analysis of the driving forces behind the energy interactions of the Chinese economy: Evidence from static and dynamic perspectives. Energy, 239, 122104. DOI: https://doi.org/10.1016/j.energy.2021.122104
View in Google Scholar
Jakubelskas, U., & Skvarciany, V. (2023). Circular economy practices as a tool for sustainable development in the context of renewable energy: What are the opportunities for the EU?. Oeconomia Copernicana, 14(3), 833–859. DOI: https://doi.org/10.24136/oc.2023.025
View in Google Scholar
Ji, Z., Niu, D., Li, W., Wu, G., Yang, X., & Sun, L. (2022). Improving the energy efficiency of China: An analysis considering clean energy and fossil energy resources. Energy, 259, 124950. DOI: https://doi.org/10.1016/j.energy.2022.124950
View in Google Scholar
Jiang, P., Khishgee, S., Alimujiang, A., & Dong, H. (2020). Cost-effective approaches for reducing carbon and air pollution emissions in the power industry in China. Journal of Environmental Management, 264, 110452. DOI: https://doi.org/10.1016/j.jenvman.2020.110452
View in Google Scholar
Kuang, H., Akmal, Z., & Li, F. (2022). Measuring the effects of green technology innovations and renewable energy investment for reducing carbon emissions in China. Renewable Energy, 197, 1–10. DOI: https://doi.org/10.1016/j.renene.2022.06.091
View in Google Scholar
Li, B., & Dewan, H. (2017). Efficiency differences among China’s resource-based cities and their determinants. Resources Policy, 51, 31–38. DOI: https://doi.org/10.1016/j.resourpol.2016.11.003
View in Google Scholar
Li, J., & Li, S. (2020). Energy investment, economic growth and carbon emissions in China—Empirical analysis based on spatial Durbin model. Energy Policy, 140, 111425. DOI: https://doi.org/10.1016/j.enpol.2020.111425
View in Google Scholar
Li, Z., Bai, T., & Tang, C. (2022). How does the low-carbon city pilot policy affect the synergistic governance efficiency of carbon and smog? Quasi-experimental evidence from China. Journal of Cleaner Production, 373, 133809. DOI: https://doi.org/10.1016/j.jclepro.2022.133809
View in Google Scholar
Li, Z., Bai, T., Qian, J., & Wu, H. (2024). The digital revolution's environmental paradox: Exploring the synergistic effects of pollution and carbon reduction via industrial metamorphosis and displacement. Technological Forecasting and Social Change, 206, 123528. DOI: https://doi.org/10.1016/j.techfore.2024.123528
View in Google Scholar
Lin, B., & Zhu, J. (2019a). Impact of energy saving and emission reduction policy on urban sustainable development: Empirical evidence from China. Applied Energy, 239, 12–22. DOI: https://doi.org/10.1016/j.apenergy.2019.01.166
View in Google Scholar
Lin, B., & Zhu, J. (2019b). Is the implementation of energy saving and emission reduction policy really effective in Chinese cities? A policy evaluation perspective. Journal of Cleaner Production, 220, 1111–1120. DOI: https://doi.org/10.1016/j.jclepro.2019.02.209
View in Google Scholar
McKinnon, B., Harper, S., Kaufman, J. S., & Bergevin, Y. (2015). Removing user fees for facility-based delivery services: A difference-in-differences evaluation from ten sub-Saharan African countries. Health Policy and Planning, 30(4), 432–441. DOI: https://doi.org/10.1093/heapol/czu027
View in Google Scholar
Monasterolo, I., & Raberto, M. (2018). The EIRIN Flow-of-funds behavioural model of green fiscal policies and green sovereign bonds. Ecological Economics, 144, 228–243. DOI: https://doi.org/10.1016/j.ecolecon.2017.07.029
View in Google Scholar
Nam, K.-M., Waugh, C. J., Paltsev, S., Reilly, J. M., & Karplus, V. J. (2014). Synergy between pollution and carbon emissions control: Comparing China and the United States. Energy Economics, 46, 186–201. DOI: https://doi.org/10.1016/j.eneco.2014.08.013
View in Google Scholar
Nie, C., & Lee, C.-C. (2023). Synergy of pollution control and carbon reduction in China: Spatial–temporal characteristics, regional differences, and convergence. Environmental Impact Assessment Review, 101, 107110. DOI: https://doi.org/10.1016/j.eiar.2023.107110
View in Google Scholar
Ogutu, H., El Archi, Y., & Dénes Dávid, L. (2023). Current trends in sustainable organization management: A bibliometric analysis. Oeconomia Copernicana, 14(1), 11-45. DOI: https://doi.org/10.24136/oc.2023.001
View in Google Scholar
Sánchez García, J., & Galdeano Gómez, E. (2023). What drives the preferences for cleaner energy? Parametrizing the elasticities of environmental quality demand for greenhouse gases. Oeconomia Copernicana, 14(2), 449–482. DOI: https://doi.org/10.24136/oc.2023.012
View in Google Scholar
Sarkodie, S. A., & Strezov, V. (2019). Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of The Total Environment, 646, 862–871. DOI: https://doi.org/10.1016/j.scitotenv.2018.07.365
View in Google Scholar
Scholtens, B. (2001). Borrowing green: Economic and environmental effects of energy fiscal policy in The Netherlands. Ecological Economics, 39(3), 425–435. DOI: https://doi.org/10.1016/S0921-8009(01)00235-X
View in Google Scholar
Shao, S., Cheng, S., & Jia, R. (2023). Can low carbon policies achieve collaborative governance of air pollution? Evidence from China’s carbon emissions trading scheme pilot policy. Environmental Impact Assessment Review, 103, 107286. DOI: https://doi.org/10.1016/j.eiar.2023.107286
View in Google Scholar
Smith, A. (2013). The climate bonus: Co-benefits of climate policy. London: Routledge. DOI: https://doi.org/10.4324/9780203109571
View in Google Scholar
Tientao, A., Legros, D., & Pichery, M. C. (2016). Technology spillover and TFP growth: A spatial Durbin model. International Economics, 145, 21–31. DOI: https://doi.org/10.1016/j.inteco.2015.04.004
View in Google Scholar
Tone, K. (2001). A slacks-based measure of efficiency in data envelopment analysis. European Journal of Operational Research, 130(3), 498-509. DOI: https://doi.org/10.1016/S0377-2217(99)00407-5
View in Google Scholar
Usman, M., Balsalobre-Lorente, D., Jahanger, A., & Ahmad, P. (2022). Pollution concern during globalization mode in financially resource-rich countries: Do financial development, natural resources, and renewable energy consumption matter?. Renewable Energy, 183, 90–102. DOI: https://doi.org/10.1016/j.renene.2021.10.067
View in Google Scholar
Wang, P., Zhao, S., Dai, T., Peng, K., Zhang, Q., Li, J., & Chen, W. Q. (2022). Regional disparities in steel production and restrictions to progress on global decarbonization: A cross-national analysis. Renewable and Sustainable Energy Reviews, 161, 112367. DOI: https://doi.org/10.1016/j.rser.2022.112367
View in Google Scholar
Wang, X., Zhao, D., & Xu, Y. (2020). Threshold effect of industrial structure upgrading on water environment pollution in China. Journal of Coastal Research, 115(sp1), 518. DOI: https://doi.org/10.2112/JCR-SI115-142.1
View in Google Scholar
Wang, Z., & Qiu, S. (2021). Can “energy saving and emission reduction” demonstration city selection actually contribute to pollution abatement in China?. Sustainable Production and Consumption, 27, 1882–1902. DOI: https://doi.org/10.1016/j.spc.2021.04.030
View in Google Scholar
Wei, X., Tong, Q., Magill, I., Vithayasrichareon, P., & Betz, R. (2020). Evaluation of potential co-benefits of air pollution control and climate mitigation policies for China’s electricity sector. Energy Economics, 92, 104917. DOI: https://doi.org/10.1016/j.eneco.2020.104917
View in Google Scholar
Wu, J., Xia, Q., & Li, Z. (2022). Green innovation and enterprise green total factor productivity at a micro level: A perspective of technical distance. Journal of Cleaner Production, 344, 131070. DOI: https://doi.org/10.1016/j.jclepro.2022.131070
View in Google Scholar
Wu, L., Sun, L., Qi, P., Ren, X., & Sun, X. (2021). Energy endowment, industrial structure upgrading, and CO2 emissions in China: Revisiting resource curse in the context of carbon emissions. Resources Policy, 74, 102329. DOI: https://doi.org/10.1016/j.resourpol.2021.102329
View in Google Scholar
Xie, W., Sheng, P., & Guo, X. (2015). Coal, oil, or clean energy: Which contributes most to the low energy efficiency in China?. Utilities Policy, 35, 67–71. DOI: https://doi.org/10.1016/j.jup.2015.05.003
View in Google Scholar
Xiong, Q., Zhao, W., Guo, X., Shu, T., Chen, F., Zheng, X., & Gong, Z. (2015). Dustfall heavy metal pollution during winter in North China. Bulletin of Environmental Contamination and Toxicology, 95(4), 548–554. DOI: https://doi.org/10.1007/s00128-015-1611-8
View in Google Scholar
Xu, T., Kang, C., & Zhang, H. (2022). China’s efforts towards carbon neutrality: Does energy-saving and emission-reduction policy mitigate carbon emissions?. Journal of Environmental Management, 316, 115286. DOI: https://doi.org/10.1016/j.jenvman.2022.115286
View in Google Scholar
Yan, Y., Zhang, X., Zhang, J., & Li, K. (2020). Emissions trading system (ETS) implementation and its collaborative governance effects on air pollution: The China story. Energy Policy, 138, 111282. DOI: https://doi.org/10.1016/j.enpol.2020.111282
View in Google Scholar
Yang, L., Liu, L., Yan, K., Cai, C., & Geng, Y. (2023). “Carrot and stick”: Energy fiscal policy, upper echelons expertise, and the green mergers and acquisitions. Finance Research Letters, 58, 104650. DOI: https://doi.org/10.1016/j.frl.2023.104650
View in Google Scholar
Yi, H., Zhao, L., Qian, Y., Zhou, L., & Yang, P. (2022). How to achieve synergy between carbon dioxide mitigation and air pollution control? Evidence from China. Sustainable Cities and Society, 78, 103609. DOI: https://doi.org/10.1016/j.scs.2021.103609
View in Google Scholar
Zhang, S., Worrell, E., & Crijns-Graus, W. (2015). Cutting air pollution by improving energy efficiency of China’s cement industry. Energy Procedia, 83, 10–20. DOI: https://doi.org/10.1016/j.egypro.2015.12.191
View in Google Scholar
Zhang, Z., & Li, Y. (2020). Coupling coordination and spatiotemporal dynamic evolution between urbanization and geological hazards–A case study from China. Science of The Total Environment, 728, 138825. DOI: https://doi.org/10.1016/j.scitotenv.2020.138825
View in Google Scholar
Zhang, Z., Zhou, Y., Zhao, N., Li, H., Tohniyaz, B., Mperejekumana, P., Hong, Q., Wu, R., Li, G., Sultan, M., Zayan, A. M. I., Cao, J., Ahmad, R., & Dong, R. (2021). Clean heating during winter season in Northern China: A review. Renewable and Sustainable Energy Reviews, 149, 111339. DOI: https://doi.org/10.1016/j.rser.2021.111339
View in Google Scholar
Zhou, B., Zhao, H., Yu, J., He, T., & Liu, J. (2022). Does the growth of the digital economy boost the efficiency of synergistic carbon-haze governance? Evidence from China. Frontiers in Environmental Science, 10, 984591. DOI: https://doi.org/10.3389/fenvs.2022.984591
View in Google Scholar
Zhu, K., Zhou, Q., Cheng, Y., Zhang, Y., Li, T., Yan, X., Alimov, A., Farmanov, E., & Dávid, L. D. (2023). Regional sustainability: Pressures and responses of tourism economy and ecological environment in the Yangtze River basin, China. Frontiers in Ecology and Evolution, 11, 1148868. DOI: https://doi.org/10.3389/fevo.2023.1148868
View in Google Scholar
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Oeconomia Copernicana

This work is licensed under a Creative Commons Attribution 4.0 International License.