Can the Digitalization Reduce Carbon Emission Intensity?—The Moderating Effects of the Fiscal Decentralization

Abstract

Carbon emission reduction is the top priority in improving green production efficiency and achieving sustainable development, while digitalization (Digi) is an important engine that drives efficient carbon emission reduction. However, in China, the government and the market jointly influence economic and social development, and the effectiveness of Digi in promoting carbon emission reduction is also influenced by the external fiscal system. In this study, we first establish a theoretical framework for digitalization that can reduce carbon emission intensity (CEI) and reveal the important role of fiscal decentralization (FD) on the impact of Digi on CEI and is based on the typical features of the Chinese FD system. Second, we investigate the relationship between Digi and CEI and the moderating effect of FD based on panel data from 30 Chinese provinces from 2011 to 2019, and we utilize a fixed-effects panel model that introduces moderating variables and a panel threshold model. By testing the econometric model, we observe that increasing the level of Digi significantly reduces CEI. FD reinforces this reduction effect, and Digi has a significant dampening effect on CEI only when the level of FD is higher than 0.84. Additionally, the inhibitory effect of Digi and positive moderating effect of FD are higher in the central and western regions of China. Finally, we suggest countermeasures to promote low-carbon development for accelerating digital transformation, thereby deepening the reform of “delegating power, improving regulation, and optimizing service” systems.