Pollution-intensive Sectors Research Articles

The impact of industrial digitization on the global value chains position: Evidence from China’ s industry sectors

Industrial digitization (ID) has become a new driving force for high-quality development of industries. Existing studies have mainly examined the global value chains position (GVCP) in terms of openness and technological progress, and there are a few studies from the perspective of industrial digitization. This paper constructs an input-output model to measure the GVCP of China's industry sectors by use the world input-output database (WIOD), and empirically tests the impact of ID on the GVCP of China's industry sectors by constructing ID indicators. The conclusions of the study are shown below. First, ID significantly enhances the GVCP of China's industry sectors, which can drive the industry sectors to realize value chain climbing. Second, mechanism analyses shows that ID can enhance the GVCP by increasing export technology complexity and revealed comparative advantage of China's industry sectors. Third, ID mainly influences the forward production lengths, and ID boosts GVCP more significantly for technology-intensive and pollution-intensive sectors. Fourth, the economic consequences show that ID decreases energy intensity and labor employment by improving the GVCP of China's industry sectors. Based on the findings, we believe that upgrading the digitization of industry sectors is an effective measure to drive up the value chains.

Can green credit policy stimulate firms’ green investments?

Green credit policy, a market-oriented green financial tool, aims to achieve simultaneous economic development and environmental protection. Utilizing china's 2012 green credit policy as a quasi-natural experiment, this paper employs a difference-in-differences method to explore its causal impact on Chinese firms' green investment behavior. The empirical results indicate that the green credit policy significantly stimulates the green investments of firms in pollution-intensive sectors compared to those in non-pollution-intensive sectors. This finding remains robust across various tests, including parallel trends, dynamic effects, confounding factors, and alternative methods. Furthermore, the green investment-induced effect is reinforced by the supplementary green credit policy introduced in 2018. The heterogeneity effect reveals that the green credit policy facilitates the green investments of firms with undisclosed environmental information. Additionally, the study finds that the green investment-induced effects are more pronounced among firms with soft financial constraints, limited access to government subsidies, state-owned firms, and larger sizes. These findings shed light on the crucial role of green finance policy in promoting green recovery, suggesting that the government should increase the provision of green credit in terms of quantity and scope.

Green credit and corporate energy efficiency: Enterprise pollution transfer or green transformation

In recent years, there has been a burgeoning emphasis on advancing the paradigm of energy transformation and expediting the maturation of novel energy systems in order to enhance the structural integrity of China's energy industry. Employing the 2007 "Opinions on Implementing Environmental Protection Policies and Regulations to Prevent Credit Risk" as a quasi-experimental setting, this study utilizes longitudinal panel data spanning from 2000 to 2014, encompassing Chinese industrial enterprises. Through the application of a difference-in-differences analytical framework, this research rigorously evaluates the ramifications of the Green Credit Policy (GCP) on firm-level energy-utilization efficiency (FLEE). The empirical findings proffer compelling evidence of a substantial amelioration in FLEE attributable to the enactment of the GCP. Furthermore, a nuanced investigation of heterogeneity reveals that the GCP exerts a conspicuously more pronounced influence in elevating FLEE levels within the eastern region, state-owned enterprises, entities characterized by low technological sophistication, and those operating within highly pollution-intensive sectors. Mechanism analysis underscores the pivotal role of resource allocation and the amelioration of financing constraints as indirect pathways through which the GCP bolsters FLEE.

To Starve or to Stoke? Understanding Whether Divestment versus Investment Can Steer (Green) Innovation

More than 1,500 organizations and investors representing more than $40 trillion in assets have committed to fossil fuel divestment to combat climate change. Will it work? This chapter explores whether divestment might induce green innovation, a critical component of the transition to a cleaner economy. Divestment could theoretically steer innovation by increasing the cost of capital for “dirty firms,” but it is unclear whether the effects will be large enough to significantly reduce investment opportunities. I argue that continuing to invest in dirty industries could drive green innovation conditional on investors being socially conscious and governing through “voice.” This hinges upon understanding which firm strategies actually foster green innovation, though, and the commonly used environmental, social, and governance indicators come with several limitations. I demonstrate how decomposing them and using alternative approaches to measuring environmental performance can improve investment, strategy, and management decision-making and policy design. I examine the relationship between 14 specific practices and whether large firms in 16 pollution-intensive sectors are on track for meeting the Paris Agreement emissions targets (“carbon performance”). I find no correlation between carbon performance and the most basic practices, such as disclosing emissions, but a positive correlation for five more explicit strategies: setting long-term quantitative emissions targets, having a third party verify emissions data, incorporating environmental performance into executive remuneration policies, supporting governmental climate change efforts, and setting an internal price of carbon. I construct a new “best practices” score based on these results and find that it has a much higher correlation with carbon performance than some other composite measures.

Waste Haven Transfer and Poverty-Environment Trap: Evidence from EU

This paper tests the extent to which the migration of "waste haven" causes a "poverty-environment trap". That is to say, imported waste caused the mid-income trap of the less developed European countries. Using Spatial Durbin Model on waste carbon dioxide emission of 28 EU countries from 2001 to 2018, we estimate the carbon footprint of imported wastes of the European Union (EU) members. The result shows an inverted "U" shape curve between GDP per capita and imported waste carbon footprint, confirming an Environment Kuznets Curve of "waste haven" transfer. It hinders the inbound of high-quality FDI. In the further mechanism test, we found industrial structure, FDI, industrialization, and urbanization are responsible for the spatial-temporal transfer of "pollution haven" and "environmental-poverty trap". The results also show that "waste haven" may accelerate the economic growth of less developed countries to some extent, however, with a higher percentage of dirty industries, FDI in the pollution-intensive sectors of these countries worsens their environmental conditions. It reinforces pollution haven effects and created a vicious circle of "poverty-environment trap" for low-income countries in the EU.

Do institutional investors facilitate corporate environmental innovation?

This paper addresses whether institutional investors drive firms’ innovation direction toward environmentally friendly technologies. The data pertain to comprehensive environmental patents filed by Chinese publicly-listed firms in the manufacturing and public utility sectors during the 2003–2015 period. We find that institutional investors are associated with higher ratios of environmental patents in total patents for firms in the pollution-intensive sectors than those in the non-pollution-intensive sectors. Institutional investors exert the roles of financial support and corporate governance in pursuit of monitoring firms’ long-term sustainable innovation. They further facilitate the information disclosure on corporate social responsibility.

How does ICT trade shape environmental impacts across the north-south regions? Intra-regional and Inter-regional perspective from dynamic CGE model

In today's modern economy, the source of many economic and environmental effects is due to the ICT goods trade. But the extent and type of effects on trade partners can depend on level of regional development. In this research, we evaluate the economic, environmental as well as energy intensity implications of ICT products trade across the developing (south) and developed (north) countries. To achieve this objective, we apply a dynamic computable general equilibrium model in the form of south-south, north-north and south-north trade. The results show that by increasing the ICT imports, carbon emissions, energy and carbon intensity will rise. If the ICT flow is from south to south and south to north, the intensity of the mentioned indicators will be more intense rather than north to other regions case. Intra-regional imports (north-north and south-south) increase ICT and GDP production within the regions, which leads to a positive scale effect. An increment in inter-regional imports (north-south) will lead to a reduction in ICT and GDP production in the ICT-importer region. In addition, the increase in intra-regional imports leads to composition effect to be negative and the improvement of inter-regional imports leads to a positive composition effect. Thus, south-south and north-north trade increases the share of pollution-intensive sectors. The study recommends trade of ICT products, which are environment and clean energy friendly, for both the regions.

Does Environmental Regulation Induce Green Innovation? A Panel Study of Chinese Listed Firms

• Investigates how China's CPA program induces firms to develop green innovation using Chinese listed-firm panel data. • The regulation effect is more pronounced in encouraging radical green innovations than incremental green innovation. • For firms belonging to pollution intensive sectors, the impacts of regulation on green innovation, both incremental and radical, are much stronger. • State-owned enterprises (SOE) and non-SOE firms have no statistically significant differences in developing green innovation in response to China's CPA program. To promote cleaner production, China launched nation-wide Cleaner Production Audit (CPA) program in 2004. This study examines the “weak” version of the Porter hypothesis while focusing on Chinese listed firms from 1990 to 2010. In this study, we provided evidence on the influence of China's CPA program on innovation based on green patent data. Using a difference-in-difference (DID) method, we find that there is a positive regulation effect on green innovation, i.e. the “weak” Porter hypothesis has been realized in the CPA program in China. Moreover, our results suggest that the regulation effect is more pronounced in encouraging radical green innovations measured by environmental invention patents than incremental green innovation measured by environmental utility patents. Then, we find that the CPA program regulatory effect is also affected by moderation variables such as industrial pollution intensity, but not by firm ownership. Our findings shed light on the policy implications on how firms respond to environmental regulations.

Effect of input servitization on carbon mitigation: evidence from China's manufacturing industry.

Manufacturing servitization, a new industrial form that integrates manufacturing and service, promotes not only high-quality economic development but also carbon mitigation. By employing the panel data of 14 manufacturing sectors and 17 service sectors from 1995 to 2009 in China, this study sheds light on the effect of manufacturing input servitization on carbon reduction. Results show that input servitization reduces carbon intensity. In terms of the manufacturing heterogeneity, the carbon abatement effect of input servitization in pollution-intensive sectors is greater than that in non-pollution sectors; with respect to the service heterogeneity, more emphasis shall be placed on transportation and business services among all manufacturing industries to curb carbon emissions. Furthermore, the mechanism analysis demonstrates that input servitization reduces carbon intensity by substituting energy elements, promoting technological innovation, and optimizing structure. These conclusions reveal that increasing the level of input servitization helps to coordinate manufacturing industry's development with carbon abatement commitmentin China.

Institutional Investors and Corporate Environmental Innovation

This paper addresses whether institutional investors drive firms' innovation direction toward environmentally friendly technologies. The data pertain to comprehensive environmental patents filed by Chinese publicly-listed firms in the manufacturing and public utility sectors during the 2003-2015 period. We find that institutional investors are associated with higher ratios of environmental patents in total patents for firms in the pollution-intensive sectors than those in the non-pollution-intensive sectors. Institutional investors exert the roles of financial support and corporate governance in pursuit of monitoring firms' long-term sustainable innovation. They further facilitate the information disclosure on corporate social responsibility. Lastly, institutional investors are motivated by financial returns.

Does Environmental Regulation Induce Green Innovation? Evidence from Chinese Listed Firms

Using a panel dataset of Chinese listed firms during the 1990-2010 periods, this paper investigates whether environmental regulations induce firms to develop innovation in environmentally friendly technologies. Environmental regulation chosen in this paper is Cleaner Production Audit (CPA) programs implemented in China. Using a difference-in-difference (DID) method, our findings suggest that there is a positive regulation effect on green innovation. The innovation-induced effect is more pronounced in encouraging radical green innovations measured by environmental invention patents than incremental green innovation measured by environmental utility patents. Furthermore, we investigate the moderating effects of industrial pollution intensity and firm’s ownership. For firms belonging to pollution intensive sectors, the impacts of this regulation on green innovation, both incremental and radical, are much stronger. The moderating effect of firm ownership, however, is not supported, suggesting that state-owned enterprises (SOEs) and non-SOE firms have no statistically significant differences in environmental innovation in response to the CPA programs.

Determinants of the Environmental Kuznets Curve considering economic activity sector diversification in the OPEC countries

Sectors contribute differently to the total level of CO2 emissions per capita, since they are heterogeneous in terms of GDP structure. This work investigates the Environmental Kuznets Curve hypothesis considering a set of twelve of the fourteen OPEC countries. It contributes to previous literature exploring the Environmental Kuznets Curve relationship by analysing how economic activity sector diversification impacts the relationship between economic growth and carbon emissions, addressing an important identified gap. To address this gap, annual data from 1992 to 2015 is used. A panel cross-section analysis is provided between countries, and for the seven considered sectors, is estimated through panel corrected standard errors and convergence estimations are presented. Conclusions point to the relocation of pollution-intensive sectors to almost all of the OPEC countries. For all countries, a U-shaped relationship is evidenced, implying that economic growth in oil-producing and exporting countries increases environmental degradation. While energy consumption increases environmental damage, trade openness seems to have a significant and negative effect over emissions, leading to environmental improvements. This study points out that OPEC countries will have increased challenges facing them in terms of environmental degradation and only a few economic activity sectors can conduct environmental improvements through growth. The inclusion of oil prices increased coefficients magnitude. Probably these sectors are already allocating more labour and capital in projects and investments on renewable energy, energy efficiency and energy savings, substituting fossil fuels like oil.

Managing the trade-off between economic growth and protection of environmental quality: the case of taxing water pollution in the Olifants river basin of South Africa

Abstract A series of pollution control measures have been introduced to protect water quality in the Olifants river basin, the third most water-stressed and most polluted basin in South Africa. This paper employed an environmentally extended computable general equilibrium (CGE) model to analyse the economic and environmental implications of a tax on water pollution in the basin. Implications of increasing the pollution tax rate currently in place for the levels of economic activities and water quality have been simulated under alternative tax revenue recycling schemes. Results of our policy simulations suggest that internalising the cost of water pollution through the tax regime achieves its environmental goals of protecting the aquatic ecosystem, by shifting production away from pollution-intensive sectors. This, however, comes at some cost to the regional economy of the basin. Recycling the tax revenue through income transfers to households or a subsidy to pollution abatement mitigates the adverse economic impacts.

Trade Liberalization and its Environmental Impact in India: An Empirical Analysis

The debate on the impact of trade on environment is pertinent considering the increasing volume of trade among world nations and the changes in environmental quality. In India, this increase was higher because of the gradual lifting of the quantitative restrictions and reduction in tariffs after trade liberalization in 1991. The pollution haven effect occurs when trade liberalization, coupled with lax environmental regulations results in increasing economic activities in pollution intensive industries. Using industry level data for the period 1998-2008, for fifty eight manufacturing industries in India, this paper looks at output and export trends and attempts to examine, whether trade liberalization is associated with a shift in production and exportation towards pollution intensive goods industries (pollution haven effect). Manufacturing output has been significantly higher from the water pollution intensive sectors compared to the air and toxic pollution intensive sectors. This evidence provides some support for concerns that there is significant contribution in production of manufacturing industries from dirty industries. The results of the study suggest that while trade liberalization measures have been pursued to promote economic growth in India but they have led to some potentially adverse environmental consequences.

Industrial dynamics and environmental performance in urban China

Abstract This study investigates how industrial dynamics alter pollution intensity in Chinese cities. Conventionally, industrial dynamics can improve the environmental performance through introducing the cleaner sectors to supersede the dirtier ones. However, we argue that this is not always the case since the route of industrial dynamics is diverse and highly region-specific. We consider the route of industrial dynamics as a synergy of path dependence and path breaking, then proposing a theoretical framework. Industrial dynamics exactly become endogenous in this framework. Using data covering 257 prefectures in China during 2003–2011, this study constructs a model to examine the framework, specifically the indirect effects of path dependence/breaking. The results show that both path dependence and path breaking affect the firm entry/exit, then generating different effects on pollution intensity. Path dependence reduces pollution intensity through the knowledge accumulation and the transformation of SOEs. Path breaking increases the pollution intensity due to the GDP-worship subsidies. However, path breaking out of the utilization of external linkages is still consequential for pollution-intensive sectors. It will introduce new firms with better environmental performance as well as upgrade pre-existing firms environmentally. Our findings may offer insights into the decision-making for urban sustainable development.

The Water-Energy-Food Nexus in East Asia: A tele-connected value chain analysis using inter-regional input-output analysis

Population and economic growth pose unique challenges in securing sufficient water, energy, and food to meet demand at the sub-national (regional), national, and supra-national level. An increasing share of this demand is met through trade and imports. The unprecedented rapid growth, extent, and complexity of global value chains (GVCs) since the 1980s have reshaped global trade. The GVCs – and new economic patterns of regionalization – affect the demands on water, energy, and food within countries and across global supply chains. East Asia is of particular interest due to the region’s rapid economic growth, substantial population size, high interdependence of the region’s economies, and varying degree of resource availability. While greater interdependence across the region has increased the efficiency of production and trade, these activities require the input of water-energy-food and generate disturbances in the environment. The transnational inter-regional input-output approach is utilized in a tele-connected Water-Energy-Food Nexus (WEFN) analysis of the East Asia GVC to assess competing demands for these resources and environmental outcomes.This analysis demonstrates the hidden virtual flows of water, energy, and food embodied in intra-regional and transnational inter-regional trade. China’s current national export oriented economic growth strategy in East Asia is not sustainable from the WEFN perspective. China is a net virtual exporter of nexus resources to Japan and South Korea. China’s prioritization of economic growth and trade in low value added and pollution intensive sectors consumes a great amount of nexus resources within its territory to satisfy consumers’ demands in Japan and South Korea. Japan’s Kanto and Kinki regions and South Korea’s Sudokwon region were the major beneficiaries while China bore the environmental burden associated with the production of exports. For example, net virtual exports from China’s East region included over 1.2billionm3 of scarce water and 61.3million metric (CO2 equivalent) tons of greenhouse gases (i.e. CO2, NH4, and N2O) and 2 million metric tons of SOx emissions.Trade is an important mechanism for overcoming resource bottlenecks, but, taking into account environmental linkages, regional specialization is not necessarily mutually beneficial. This analysis demonstrates a mismatch between regional water-energy-food availability and final resource consumption and the lack of attention for environmental impacts in national economic growth strategies. Resource scarce countries like China must, therefore, incorporate trade-off decisions between pursuing national economic growth, incurring environmental degradation, and food security into strategic regional development policies.

EU air pollution regulation: A breath of fresh air for Eastern European polluting industries?

Does air quality regulation in the European Union (EU) foster polluting activity in emerging and developing countries? In this paper, we propose an original variable that evaluates regulation stringency, based on the EU Air Quality Framework Directive. Focusing on the underlying mechanism and controlling for endogeneity in the relation between regulation and trade, we provide robust evidence that EU countries implementing more stringent air pollution regulations import relatively more in pollution-intensive sectors from developing and emerging countries in Europe and Central Asia.

A combined input–output/decision making trial and evaluation laboratory method for evaluating effect of the remanufacturing sector development

The increasingly intensive industrial activities in emerging economies like China have caused serious resource depletion and pollution issues. As remanufacturing practices effectively solve common environmental problems in recycling and processing stages by minimizing emissions of wastes, remanufacturing has become an important eco-industry, and it has been gradually adopted in recent years in China. Based on the input–output theory and previous studies, this paper establishes an input–output model with multiple remanufacturing sectors, and develops a combined input–output and Decision Making Trial and Evaluation Laboratory method. Then, using the input–output table of China in 2007, the combined method is used to examine the role of the remanufacturing sector in the national economy as well as its symbiotic effects with other sectors for energy saving and emissions reduction. The results show that the remanufacturing development is far below the average development level of other sectors in China. With the rising market share of remanufacturing, the demand of some energy-intensive and pollution-intensive sectors, including Smelting and Rolling of Metals, and Production & Supply of Electric Power & Heat Power, can be significantly decreased. But the demand of Traffic, Transport and Storage is increased. The results can provide a scientific basis in formulating economic policies to promote the remanufacturing development and the macro adjustment of the industrial structure for the government.

Environmental emissions by Chinese industry: Exergy-based unifying assessment

Based on chemical exergy as an objective measure for the chemical deviation between the emission and the environment, a unifying assessment is carried out for major environmental emissions covering COD, ammonia nitrogen, SO2, soot, dust, NOx and solid waste by Chinese industry over 1997–2006, with emphasis on the sectoral and regional levels in 2006. Of the total emission in exergy up to 274.1PJ in 2006, 67.7% is estimated from waste gases, 29.9% from waste water and 2.4% from solid waste. Five of 40 sectors and 12 of 30 regions are responsible for 72.7% and 65.5% of the total emission, respectively. SO2 is the leading emission type in 9 sectors and 25 regions, and COD in another 28 sectors and 5 regions. Some pollution-intensive sectors such as Production and Distribution of Electric Power and Heat Power and Manufacture of Paper and Paper Products, and western and inland regions such as Guangxi and Ningxia with high emission intensities are identified. By clustering and disjoint principal component analysis with intensities of emissions and fuel coal use as variables, three principal components are extracted, and four statistically significant clusters are pinpointed in the sectoral and regional analysis. Corresponding policy-making implications are addressed.

The Pollution Effects of Mergers and Acquisitions: Asymmetry, Disaggregation, and Multilateralism

textabstractThis paper studies the impact of cross-border Mergers and Acquisitions (MA (ii) Sector-specific impact: pollution intensive sectors have an impact on CO2 emissions, whereas other sectors do not; (iii) Multilateralism: multilateral agreements are important to reduce CO2 emissions.