Unintended environmental gains: The impact of China–Europe Railway Express on carbon dioxide emissions in China

Abstract

Climate change is a major environmental issue, while reducing carbon dioxide emissions is viewed as a vital measure against global warming. The CHINA RAILWAY Express (CRE) could attract or foster new export-oriented industries by generating new profitable export opportunities and enhancing access to European markets. This study focused on the unintended effect of the CRE policy on carbon dioxide emissions reduction, which stems from its promotion of industry development. We used the synthetic difference-in-differences approach to derive reliable estimation of the CRE’s unintended low-carbon effect. After controlling for the influence of other emission sectors and other low-carbon policies, the estimated results indicate that the CRE only reduced carbon dioxide emissions in the 12 cities with regular CRE services. The unintended policy effect decreased carbon dioxide emissions, on average, by 9.18%. Further heterogeneous analysis shows that the CRE’s effect is positively correlated with the numbers of CRE trains. Moreover, the CRE has a heterogeneous impact on high-carbon and low-carbon sectors. Because the CRE can promote the exports of low-carbon sectors to Europe rather than those of high-carbon sectors, the CRE has a prominent impact on reducing average carbon dioxide emissions and improving the industrial structure. Formal mechanism analysis confirms that the impact of the CRE on carbon dioxide emissions actually occurs through the mechanism of industrial structure upgrading. Our results reveal the CRE’s unintended environmental gains and offer insight for governments that hope to simultaneously reduce carbon dioxide emissions and promote economic growth.