Industrial agglomeration, environmental regulation, and carbon emissions reduction under the carbon neutrality goal: Threshold effects based on stages of industrialization in China

Abstract

Environmental regulation affect industrial agglomeration, which in turn influences CO2 emissions. However, the impact of the stage of industrialization on the emission reduction effects of environmental regulation on industrial agglomeration has not been sufficiently studied. This study explores the effect of industrial agglomeration on CO2 emissions using panel data from 286 prefecture-level cities in China from 2003 to 2020 from the perspective of environmental regulation. The results of the extended STIRPAT model showed a U-shaped relationship between industrial agglomeration and CO2 emissions, whereas industrial agglomeration was closely related to the degree of environmental regulation. Tightening environmental regulation hinders the emission reduction effect of industrial agglomeration, especially in the early stages of industrialization. The threshold model indicated that the larger the ratio of industrial output to GDP, the greater the effect of environmental regulation on emission reduction from industrial agglomeration. These findings suggest to reduce emissions in cities, the level of industrial agglomeration and stages of industrialization should be considered to implement effective environmental regulation policies. The timetables to achieve low-carbon development and carbon neutrality can differ and governments should adapt environmental regulation policies to local conditions as much as possible.