Innovation or introduction? Impacts of the low-carbon city pilot policy on the pathways toward green technology progress

Abstract

To examine whether the low-carbon city pilot (LCCP) policy influences the green technology innovation (GTI) or embodied technology introduction (ETI), two different pathways to green technology progress, in manufacturing enterprises in China, this study employs a staggered difference-in-difference (DID) model to evaluate the effects of the policy. The findings suggest that the LCCP policy has stimulated an increase in the quantity of GTI and ETI among enterprises, but reduced the quality of innovation. Large, high-carbon-intensity, and state-owned enterprises are more likely to engage in GTI, while small, low-carbon-intensity, and non-state-owned enterprises prefer ETI. The policy is effective in alleviating financing constraints and improving environmental concerns. Both GTI and ETI play a crucial role in economic performance, while the latter also promotes environmental and ESG performance. Accordingly, we recommend establishing a policy-compatible evaluation system, strengthening mandatory and incentive measures, and cultivating a green innovation ecosystem, etc., to improve the performance of the LCCP policy.