Impacts of environmental regulation and innovation-driven upgrading on carbon emission: Evidence from China

To ensure economic growth while alleviating environmental pressures, China has enacted various environmental regulations and industrial upgrading strategies in recent decades. This study investigates the effects of these initiatives on China's carbon intensity, with a particular focus on spatial effects. The dynamic spatial econometric model is used to analyze data from 30 provinces in China from 2001 to 2020. The results clearly indicate that environmental regulation significantly contributes to curbing carbon emissions, and its influence on carbon emissions is further refined through industrial restructuring and technological innovation. Mechanism tests demonstrate that China's environmental regulations can effectively reduce carbon emissions by promoting the marketization of technological innovations. Additionally, this study observes the presence of spillover effects and temporal lags in environmental regulation. However, these effects vary greatly across regions with different economic levels. In underdeveloped regions, the spillover effect of environmental regulations has a negative influence on carbon reduction. These findings contribute to achieving carbon emission reduction targets, promoting industrial transformation in emerging markets, and are significant for achieving regional equity.