The combining and cooperative effects of carbon price and technological innovation on carbon emission reduction: Evidence from China's industrial enterprises

Abstract

To achieve the carbon peaking and neutrality targets in China, carbon price and technological innovation will play increasingly important roles in recent future. It is widely-known that carbon price and technological innovation can contribute significantly to emission reduction, respectively; but it is still unclear whether the cooperation effects of carbon price and technological innovation would be positive or negative. In this paper, we assume that there are 3 types of emission reduction measures in China's industrial enterprises, which are improvement of energy efficiency, adjustment of energy structure, and substitution of pollution inputs and non-pollution inputs; then we introduce carbon price and technological innovation respectively and simultaneously, and establish 12 scenarios based on the Data Envelopment Analysis models combined with material balance principal (DEA-MBP), and estimate the additional emission reductions and additional production costs of China's industrial enterprises when carbon price and technological innovation exist respectively or simultaneously. The counterfactually estimating results show that there would be significant regional and sectorial heterogeneities in carbon emission reduction characteristics for China's industrial enterprises. If low-carbon technologies in some sectors have the ability to reduce carbon emissions at the expense of high additional production cost, carbon pricing policies would encourage enterprises to adopt new mitigation technologies and increase additional emission reduction by more than 20%, especially technologies focusing on the adjustment of energy structure and the substitution of pollution inputs by non-pollution inputs. However, in some sectors which have already been covered by carbon pricing policies, the additional carbon pricing policy may not have a significant effect on emission reduction, and the emission reduction would decrease by 10%.