Can the China-Europe Railway Express reduce carbon dioxide emissions? New mechanism of the manufacturing industry substitution effect

The China-Europe Railway Express (CRE) has attracted and fostered low-carbon, exportoriented manufacturing industry sectors; thus, it could reduce carbon dioxide emissions through the manufacturing industry substitution effect. To verify this new mechanism, this study focuses on a specific case, namely, Chongqing's electronic and telecommunications equipment (ETE) manufacturing industry, as this sector is a low-carbon industry promoted by the CRE. This study proposes a novel detour estimation strategy for causal identification of the environmental externality of the CRE on carbon dioxide emissions. The results show that the CRE could contribute to an increase of 567.06 billion yuan in ETE exports from Chongqing to Europe and a consequent reduction of 17.10 million tons of carbon dioxide between 2011 and 2021. This study provides new insights into the environmental externality of the CRE and the mechanism of the manufacturing industry substitution effect, contributing to the understanding of the relationship between transportation and carbon dioxide emissions.