Research on Environmental Regulation and Carbon Emissions Efficiency of 28 Manufacturing Industries in China

Abstract

Based on the panel data of 28 industries of China’s manufacturing industries from 2000 to 2013, through constructing a non-radial and double oriented DEA window model, we empirically estimated and analyzed the efficiency of carbon emissions reduction of manufacturing industries in China, and tested the threshold effect of environmental regulation on carbon emissions efficiency through panel threshold method. Results show that there are significant disparities among manufacturing industries in carbon emissions efficiency. The energy-intensive and resource-intensive industries have formed relative pollution industries, which have excessive energy input, excessive carbon dioxide emissions as well as efficiency loss for improper allocation of resources in the production process. Threshold test shows that there is a nonlinear relationship of ‘inverted U-curve’ between environmental regulation and carbon emissions efficiency. While we can improve the efficiency of carbon emissions by strengthening environmental regulation intensity, there is a ‘threshold effect’ in environmental regulation, firming that ‘Porter Hypothesis’ cannot set up without an important premise: a properly designed environmental regulation. We classified 28 manufacturing industries into five categories: weak regulation, mid-weak regulation, mid-strong regulation and strong regulation based on whether the emission intensity crosses the corresponding threshold value, and found that more than half of the relative pollution industries are in weak regulation and mid-weak regulation. Thus, we conclude that in order to improve the efficiency of carbon emissions reduction of manufacturing industry, we should give full play to the positive role of technology emissions reduction, scale economy, structural adjustment and optimization of energy structure.