Green innovation and China’s CO2 emissions – the moderating effect of institutional quality

Abstract

China’s economy is faced with mounting pressure to reduce CO2 emissions. This study estimates the impact of green innovation and institutional quality on CO2 emissions, and examines the moderating effect of institutional quality. The results show that: (1) Green innovation significantly reduced CO2 emissions. Institutional quality has a negative moderating effect on the relationship between green innovation and CO2 emissions, such that when institutional quality is high, green innovation has a stronger reduction in CO2 emissions. (2) Green innovation significantly reduced CO2 emissions in the eastern and western regions. Moreover, as institutional quality improves, the reduction of CO2 emissions through green innovation increased in the western region. (3) Green innovation in 2013–2017 had a greater effect on CO2 emissions reduction than 2005–2012. Moreover, with the improvement of institutional quality, green innovation’s reduction of CO2 emissions in 2005–2012 was weakened, whereas the reduction of CO2 emissions by green innovation increased in 2013–2017.