Top

The Annals of Regional Science

Published in:

20-06-2024 | Special Issue Paper

The spatial spillover effect of carbon emission trading scheme on green innovation in China’s cities

Authors: Jingru Xu, Xiangjing Tong, Baochen Yang

Published in: The Annals of Regional Science | Issue 2/2024

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

The interactive behaviors, such as competition and learning between local and neighboring cities, can lead to spatial spillover effects in policy implementation. Estimating the direct, indirect, and total effects of the carbon emission trading scheme (CETS) on green innovation is crucial to clarify its role and mechanisms. This paper applies the spatial difference-in-differences model to estimate these effects using data from 278 cities in China from 2009 to 2019. The results demonstrate that the CETS implementation catalyzes green innovation in pilot cities, which supports the Porter hypothesis. However, it has a negative impact on green innovation in neighboring cities of pilot cities, with this negative impact diminishing as distance increases. Notably, the total effect of the CETS is significantly negative, indicating that the CETS’s average impact on green innovation in all cities is negative. Mechanism analysis reveals that the direct and indirect effects of the CETS on green innovation are strengthened in cities with higher levels of financial development, lower financial pressure, and easier economic growth targets. Notably, in cities with high-level industrial structures, the CETS not only enhances its contribution to green innovation but also mitigates its negative impact on neighboring cities. Furthermore, this paper explores the heterogeneous effects of the CETS from the perspective of its implementation measures.

previous article How does digital transformation affect the emissions of environmental pollutants? From the perspective of nonlinear nexuses

next article Is Europe prepared to live without emissions? A dynamic analysis of the energy transition in economic sectors

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

inform now

http://www.scio.gov.cn/ztk/dtzt/44689/47315/index.html.

Ambec S, Cohen MA, Elgie S, Lanoie P (2013) The Porter Hypothesis at 20: can environmental regulation enhance innovation and competitiveness? Rev Environ Econ Policy 7:2–22CrossRef

Anselin L (2010) Thirty years of spatial econometrics. Pap Reg Sci 89:3–25CrossRef

Bai J, Ru H (2022) Carbon emissions trading and environmental protection: international evidence. National Bureau of Economic Research Working paper series no. 30587

Benedek J (2016) The role of urban growth poles in regional policy: the Romanian case. Procedia Soc Behav Sci 223:285–290CrossRef

Bian Z, Liu J, Zhang Y, Peng B, Jiao J (2024) A green path towards sustainable development: the impact of carbon emissions trading system on urban green transformation development. J Clean Prod 442:140943CrossRef

Boeing P (2016) The allocation and effectiveness of China’s R&D subsidies—evidence from listed firms. Res Policy 45:1774–1789CrossRef

Brouwers R, Schoubben F, Van Hulle C, Van Uytbergen S (2016) The initial impact of EU ETS verification events on stock prices. Energy Policy 94:138–149CrossRef

Buysse K, Verbeke A (2003) Proactive environmental strategies: a stakeholder management perspective. Strateg Manag J 24:453–470CrossRef

Cai X, Zhu B, Zhang H, Li L, Xie M (2020) Can direct environmental regulation promote green technology innovation in heavily polluting industries? Evidence from Chinese listed companies. Sci Total Environ 746:140810CrossRef

Calel R, Dechezleprêtre A (2016) Environmental policy and directed technological change: evidence from the European carbon market. Rev Econ Stat 98:173–191CrossRef

Cao J, Ho MS, Ma R, Teng F (2021) When carbon emission trading meets a regulated industry: evidence from the electricity sector of China. J Public Econ 200:104470CrossRef

Chen L, Wang K (2022) The spatial spillover effect of low-carbon city pilot scheme on green efficiency in China’s cities: evidence from a quasi-natural experiment. Energy Econ 110:106018CrossRef

Chen C, Jiang D, Lan M, Li W, Ye L (2022) Does environmental regulation affect labor investment efficiency? Evidence from a quasi-natural experiment in China. Int Rev Econ Finance 80:82–95CrossRef

Cui H, Cao Y (2024) Low-carbon city construction, spatial spillovers and greenhouse gas emission performance: evidence from Chinese cities. J Environ Manag 355:120405CrossRef

Dai S, Qian Y, He W, Wang C, Shi T (2022) The spatial spillover effect of China’s carbon emissions trading policy on industrial carbon intensity: evidence from a spatial difference-in-difference method. Struct Change Econ Dyn 63:139–149CrossRef

Dong F, Dai Y, Zhang S, Zhang X, Long R (2019) Can a carbon emission trading scheme generate the Porter effect? Evidence from pilot areas in China. Sci Total Environ 653:565–577CrossRef

Dong X, Zheng S, Kahn ME (2020) The role of transportation speed in facilitating high skilled teamwork across cities. J Urban Econ 115:103212CrossRef

Du G, Yu M, Sun C, Han Z (2021) Green innovation effect of emission trading policy on pilot areas and neighboring areas: an analysis based on the spatial econometric model. Energy Policy 156:112431CrossRef

Dyer JH, Nobeoka K (2000) Creating and managing a high-performance knowledge-sharing network: the Toyota case. Strateg Manag J 21:345–367CrossRef

Elhorst JP (2012) Matlab software for spatial panels. Int Reg Sci Rev 37:389–405CrossRef

Elhorst P, Zandberg E, De Haan J (2013) The impact of interaction effects among neighbouring countries on financial liberalization and reform: a dynamic spatial panel data approach. Spat Econ Anal 8:293–313CrossRef

Fabrizi A, Guarini G, Meliciani V (2018) Green patents, regulatory policies and research network policies. Res Policy 47:1018–1031CrossRef

Fan F, Dai S, Zhang K, Ke H (2021a) Innovation agglomeration and urban hierarchy: evidence from Chinese cities. Appl Econ 53:6300–6318CrossRef

Fan H, Peng Y, Wang H, Xu Z (2021b) Greening through finance? J Dev Econ 152:102683CrossRef

Feng T, Du H, Lin Z, Zuo J (2020) Spatial spillover effects of environmental regulations on air pollution: evidence from urban agglomerations in China. J Environ Manag 272:110998CrossRef

Grossman GM, Helpman E (2018) Growth, trade, and inequality. Econometrica 86:37–83CrossRef

Gu G, Zheng H, Tong L, Dai Y (2022) Does carbon financial market as an environmental regulation policy tool promote regional energy conservation and emission reduction? Empir Evid China Energy Policy 163:112826CrossRef

Hong Q, Cui L, Hong P (2022) The impact of carbon emissions trading on energy efficiency: evidence from quasi-experiment in China’s carbon emissions trading pilot. Energy Econ 110:106025CrossRef

Hsu P-H, Tian X, Xu Y (2014) Financial development and innovation: cross-country evidence. J Financ Econ 112:116–135CrossRef

Hu J, Pan X, Huang Q (2020) Quantity or quality? The impacts of environmental regulation on firms’ innovation-Quasi-natural experiment based on China’s carbon emissions trading pilot. Technol Forecast Soc Change 158:120122CrossRef

Jia R, Shao S, Yang L (2021) High-speed rail and CO2 emissions in urban China: a spatial difference-in-differences approach. Energy Econ 99:105271CrossRef

Lee C-C, Feng Y, Peng D (2022) A green path towards sustainable development: the impact of low-carbon city pilot on energy transition. Energy Econ 115:106343CrossRef

LeSage JP, Pace RK (2008) Spatial econometric modeling of origin-destination flows. J Reg Sci 48:941–967CrossRef

Lesage J, Pace R (2009) Introduction to spatial econometrics. CRC Press, Boca RatonCrossRef

Li B, Wu S (2017) Effects of local and civil environmental regulation on green total factor productivity in China: a spatial Durbin econometric analysis. J Clean Prod 153:342–353CrossRef

Li J, Du Y (2021) Spatial effect of environmental regulation on green innovation efficiency: evidence from prefectural-level cities in China. J Clean Prod 286:125032CrossRef

Li J, Sutherland D, Ning L, Wang Y (2014) Firm ownership, industrial structure, and regional innovation performance in China’s provinces. Technol Anal Strateg Manag 26:1001–1022CrossRef

Li H-L, Zhu X-H, Chen J-Y, Jiang F-T (2019) Environmental regulations, environmental governance efficiency and the green transformation of China’s iron and steel enterprises. Ecol Econ 165:106397CrossRef

Li L, Ma S, Zheng Y, Ma X, Duan K (2022) Do regional integration policies matter? Evidence from a quasi-natural experiment on heterogeneous green innovation. Energy Econ 116:106426CrossRef

Lin B, Wu N (2022) Will the China’s carbon emissions market increase the risk-taking of its enterprises? Int Rev Econ Finance 77:413–434CrossRef

Liu Z, Sun H (2021) Assessing the impact of emissions trading scheme on low-carbon technological innovation: evidence from China. Environ Impact Assess Rev 89:106589CrossRef

Liu J-Y, Zhang Y-J (2021) Has carbon emissions trading system promoted non-fossil energy development in China? Appl Energy 302:117613CrossRef

Liu Y, Liu S, Shao X, He Y (2022) Policy spillover effect and action mechanism for environmental rights trading on green innovation: evidence from China’s carbon emissions trading policy. Renew Sustain Energy Rev 153:111779CrossRef

Los B, Verspagen B (2000) R&D spillovers and productivity: evidence from U.S. manufacturing microdata. Empir Econ 25:127–148CrossRef

Mo J, Tu Q, Wang J (2023) Carbon pricing and enterprise productivity: the role of price stabilization mechanism. Energy Econ 120:106631CrossRef

Ouyang X, Fang X, Cao Y, Sun C (2020) Factors behind CO₂ emission reduction in Chinese heavy industries: do environmental regulations matter? Energy Policy 145:111765CrossRef

Pan X, Pu C, Yuan S, Xu H (2022) Effect of Chinese pilots carbon emission trading scheme on enterprises’ total factor productivity: the moderating role of government participation and carbon trading market efficiency. J Environ Manag 316:115228CrossRef

Peng W, Yin Y, Kuang C, Wen Z, Kuang J (2021) Spatial spillover effect of green innovation on economic development quality in China: evidence from a panel data of 270 prefecture-level and above cities. Sustain Cities Soc 69:102863CrossRef

Perroux F (1950) Economic space: theory and applications. Q J Econ 64:89–104CrossRef

Porter ME, van der Linde C (1995) Toward a new conception of the environment–competitiveness relationship. J Econ Perspect 9:97–118CrossRef

Ren X, Li Y, YanWenLu CFZ (2022) The interrelationship between the carbon market and the green bonds market: evidence from wavelet quantile-on-quantile method. Technol Forecast Soc Change 179:121611CrossRef

Rogge KS, Schneider M, Hoffmann VH (2012) Erratum to “The innovation impact of the EU Emission Trading System—findings of company case studies in the German power sector” [Ecol Econ 70 (3) (2011) 513–523]. Ecol Econ 74:179

Saito H, Hirota H, Yunoue H, Miyaki M (2023) Do municipal mergers internalise spatial spillover effects? Empirical evidence from Japanese municipalities. Ann Reg Sci 70:379–406CrossRef

Shi B, Feng C, Qiu M, Ekeland A (2018) Innovation suppression and migration effect: the unintentional consequences of environmental regulation. China Econ Rev 49:1–23CrossRef

Su Y, Fan Q-M (2022) Renewable energy technology innovation, industrial structure upgrading and green development from the perspective of China’s provinces. Technol Forecast Soc Change 180:121727CrossRef

Wang S, Yang L (2022) Spatial competition, strategic R&D and the structure of innovation networks. J Bus Res 139:13–31CrossRef

Wang W, Zhang Y-J (2022) Does China’s carbon emissions trading scheme affect the market power of high-carbon enterprises? Energy Econ 108:105906CrossRef

Wang J, Guo D (2023) Siphon and radiation effects of ICT agglomeration on green total factor productivity: evidence from a spatial Durbin model. Energy Econ 126:106953CrossRef

Wang K-L, Pang S-Q, Zhang F-Q, Miao Z, Sun H-P (2022) The impact assessment of smart city policy on urban green total-factor productivity: evidence from China. Environ Impact Assess Rev 94:106756CrossRef

Wen F, Wu N, Gong X (2020) China’s carbon emissions trading and stock returns. Energy Econ 86:104627CrossRef

Xie L, Zhou Z, Hui S (2022) Does environmental regulation improve the structure of power generation technology? Evidence from China’s pilot policy on the carbon emissions trading market (CETM). Technol Forecast Soc Change 176:121428CrossRef

Xu XD, Zeng SX, Zou HL, Shi JJ (2016) The impact of corporate environmental violation on shareholders’ wealth: a perspective taken from media coverage. Bus Strateg Environ 25:73–91CrossRef

Yang X, Jiang P, Pan Y (2020) Does China’s carbon emission trading policy have an employment double dividend and a Porter effect? Energy Policy 142:111492CrossRef

Yao S, Yu X, Yan S, Wen S (2021) Heterogeneous emission trading schemes and green innovation. Energy Policy 155:112367CrossRef

Yu D-J, Li J (2021) Evaluating the employment effect of China’s carbon emission trading policy: based on the perspective of spatial spillover. J Clean Prod 292:126052CrossRef

Yu C-H, Wu X, Zhang D, Chen S, Zhao J (2021) Demand for green finance: resolving financing constraints on green innovation in China. Energy Policy 153:112255CrossRef

Yu X, Shi J, Wan K, Chang T (2022) Carbon trading market policies and corporate environmental performance in China. J Clean Prod 371:133683CrossRef

Zeng S, Jin G, Tan K, Liu X (2023) Can low-carbon city construction reduce carbon intensity? Empirical evidence from low-carbon city pilot policy in China. J Environ Manag 332:117363CrossRef

Zhang G, Zhang N (2020) The effect of China’s pilot carbon emissions trading schemes on poverty alleviation: a quasi-natural experiment approach. J Environ Manag 271:110973CrossRef

Zhang Z, Wei X (2023) Spatial spillover effects of national-level eco-industrial park establishment on regional ecological efficiency: evidence from 271 cities in China. Environ Sci Pollut Res 30:62440–62460CrossRef

Zhang S, Wang Y, Hao Y, Liu Z (2021) Shooting two hawks with one arrow: could China’s emission trading scheme promote green development efficiency and regional carbon equality? Energy Econ 101:105412CrossRef

Zhang M, Ge Y, Liu L, Zhou D (2022a) Impacts of carbon emission trading schemes on the development of renewable energy in China: spatial spillover and mediation paths. Sustain Prod Consum 32:306–317CrossRef

Zhang W, Li G, Guo F (2022b) Does carbon emissions trading promote green technology innovation in China? Appl Energy 315:119012CrossRef

Zhao M, Sun T (2022) Dynamic spatial spillover effect of new energy vehicle industry policies on carbon emission of transportation sector in China. Energy Policy 165:112991CrossRef

Zhou F, Wang X (2022) The carbon emissions trading scheme and green technology innovation in China: a new structural economics perspective. Economic Anal Policy 74:365–381CrossRef

Title: The spatial spillover effect of carbon emission trading scheme on green innovation in China’s cities
Authors: Jingru Xu
Xiangjing Tong
Baochen Yang
Publication date: 20-06-2024
Publisher: Springer Berlin Heidelberg
Published in: The Annals of Regional Science / Issue 2/2024
Print ISSN: 0570-1864
Electronic ISSN: 1432-0592
DOI: https://doi.org/10.1007/s00168-024-01285-y

Is Europe prepared to live without emissions? A dynamic analysis of the energy transition in economic sectors

Open Access
Special Issue Paper

How does regional integration affect CO2 emission intensity? A natural experiment based on the expansion of the Yangtze River Delta, China

Special Issue Paper

Effects on sectors and regions of a carbon tax increase in Sweden: analysis with an SCGE model

Special Issue Paper

Carbon emissions from the perspective of regional competition: evidence from China’s low-carbon city policy

Special Issue Paper

Industrial clusters and carbon emission reduction: evidence from China

Special Issue Paper

Climate change, carbon neutrality: the role of spatial economics

Special Issue Editorial