The impact of low-carbon city pilot on carbon emissions of high-polluting enterprises − Based on financing constraint perspective

Abstract

As the major contributor to climate change, enterprises in high-polluting industries have a large deal of potential to reduce their carbon emissions, and the efficacy of that reduction is correlated with the nation's overall environmental pollution and climate change. As a comprehensive environmental regulation policy, whether the low-carbon city pilot (LCCP) can promote the carbon emission reduction of high-polluting enterprises remains to be verified. Based on the data of all high-polluting listed companies in China during the period of 2010–2020, this study evaluates the implementation effect of the LCCP through the multi-period difference-in-differences model, and conducts a series of robustness tests. In addition, the implementation path, heterogeneity and industry spillover effects of the policy are also studied. The study shows that the LCCP policy significantly reduces the growth rate of carbon emissions of enterprises in high-polluting industries by 1.06 percentage points on average. Financing constraints play a negative moderating role between the LCCP and the growth rate of carbon emissions. The mechanism test demonstrates that the LCCP reduces the carbon emission growth rate of enterprises in high-polluting industries through enterprise technological innovation and increasing environmental protection investment level. Further analysis can also find that the LCCP has a more obvious emission reduction effect on state-owned enterprises and enterprises in areas with lax environmental law enforcement. And there is an economic spillover effect but no industrial spillover effect. In view of this, local governments should play a guiding role in the policy, continue to expand the scale of the LCCP and focus on non-state-owned enterprises to promote the green transformation of high-polluting enterprises. This study offers significant theoretical and practical reference value for the further implementation of environmental regulation in the field of environmental governance and the reduction of enterprise carbon emissions.