The impact of local government investment on the carbon emissions reduction effect: An empirical analysis of panel data from 30 provinces and municipalities in China.

Lingyun He,Zhihua Ding,Fang Yin,Zhangqi Zhong

doi:10.1371/journal.pone.0180946

Abstract

Among studies of the factors that influence carbon emissions and related regulations, economic aggregates, industrial structures, energy structures, population levels, and energy prices have been extensively explored, whereas studies from the perspective of fiscal leverage, particularly of local government investment (LGI), are rare. Of the limited number of studies on the effect of LGI on carbon emissions, most focus on its direct effect. Few studies consider regulatory effects, and there is a lack of emphasis on local areas. Using a cointegration test, a panel data model and clustering analysis based on Chinese data between 2000 and 2013, this study measures the direct role of LGI in carbon dioxide (CO2) emissions reduction. First, overall, within the sample time period, a 1% increase in LGI inhibits carbon emissions by 0.8906% and 0.5851% through its influence on the industrial structure and energy efficiency, respectively, with the industrial structure path playing a greater role than the efficiency path. Second, carbon emissions to some extent exhibit inertia. The previous year’s carbon emissions impact the following year’s carbon emissions by 0.5375%. Thus, if a reduction in carbon emissions in the previous year has a positive effect, then the carbon emissions reduction effect generated by LGI in the following year will be magnified. Third, LGI can effectively reduce carbon emissions, but there are significant regional differences in its impact. For example, in some provinces, such as Sichuan and Anhui, economic growth has not been decoupled from carbon emissions. Fourth, the carbon emissions reduction effect in the 30 provinces and municipalities sampled in this study can be classified into five categories—strong, relatively strong, medium, relatively weak and weak—based on the degree of local governments’ regulation of carbon emissions. The carbon emissions reduction effect of LGI is significant in the western and central regions of China but not in the eastern and northeast regions. This study helps overcome the limitations of previous studies on the regulatory effects of LGI on carbon emissions, and the constructed model may more closely reflect actual economic conditions. Moreover, the current study can benefit countries similar to China that aim to objectively identify the impacts of their LGI on carbon emissions, and such countries can use it as a reference in the formulation of investment policies based on their economic and industrial characteristics.

Highlights

Since the Intergovernmental Panel on Climate Change (IPCC) released its third climate evaluation report, climate warming has gradually become an increasingly important agenda item
When carbon emissions inertia is considered, the carbon emissions reduction effects of local government investment (LGI) are improved to some extent through these two paths, which indicates that good carbon emissions reduction effects magnify the carbon inhibition generated by LGI
In places with sizeable carbon emissions, carbon inhibition through LGI might be offset by carbon emissions inertia; its role is hardly evident

Summary

Introduction

Since the Intergovernmental Panel on Climate Change (IPCC) released its third climate evaluation report, climate warming has gradually become an increasingly important agenda item. China ranks first in carbon emissions in the world and has committed itself to conserving energy and reducing emissions. It has entered a “new normal” stage of economic development that provides opportunities for energy conservation and emissions reduction. Until now, studies on the effect of fiscal leverage on carbon emissions reduction have been rare. The results of this study can benefit the objective localization of the government’s energy conservation and emissions reduction policies. It can provide a basis for local governments to formulate effective energy conservation and emissions reduction policies based on their respective economic situations. The sixth section focuses on regional differences in the effects of LGI on carbon emissions reduction, and the last section provides the study’s conclusions

Literature review

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Findings

Conclusions