Green technology innovation is increasingly becoming an important driver of modern development. Facing the pressure of the carbon neutrality target, China has been strengthening environmental regulations in recent years, and the green technology innovation ability of market players has been affected. Moreover, the impact of environmental regulations on green technology innovation and the strategies to develop green technology innovation still need to be further explored. Here, we used 285 cities from 2010–2020 as research subjects, constructed indicators such as environmental regulation and green technology innovation capability, and used panel regression, threshold effect and mediating effect methods. The results reveal that: (1) environmental regulation has a disincentive effect on green technology innovation, as increased environmental regulation increases production costs, external costs and opportunity costs for firms, causing a mismatch of resources and creating a “crowding-out effect” that inhibits innovation development; (2) further study finds that when the human capital level reaches a certain threshold value, the impact of environmental regulation on green technology innovation shifts significantly, i.e., there is a threshold effect; (3) industrial structure can further be upgraded and optimized by environmental regulation, which will have an impact on green technology innovation, thus industrial structure optimization plays a mediating role. We conclude with recommendations for improving green innovation techniques for market players, and provide some lessons for accelerating the goal of carbon neutrality and promoting quality economic development.
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