Green innovation and China’s CO₂ emissions – the moderating effect of institutional quality

Abstract

China’s economy is faced with mounting pressure to reduce CO₂ emissions. This study estimates the impact of green innovation and institutional quality on CO₂ emissions, and examines the moderating effect of institutional quality. The results show that: (1) Green innovation significantly reduced CO₂ emissions. Institutional quality has a negative moderating effect on the relationship between green innovation and CO₂ emissions, such that when institutional quality is high, green innovation has a stronger reduction in CO₂ emissions. (2) Green innovation significantly reduced CO₂ emissions in the eastern and western regions. Moreover, as institutional quality improves, the reduction of CO₂ emissions through green innovation increased in the western region. (3) Green innovation in 2013–2017 had a greater effect on CO₂ emissions reduction than 2005–2012. Moreover, with the improvement of institutional quality, green innovation’s reduction of CO₂ emissions in 2005–2012 was weakened, whereas the reduction of CO₂ emissions by green innovation increased in 2013–2017.

Keywords:

• green innovation
• CO₂ emissions
• institutional quality
• China

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

2 To eliminate the effect of heteroscedasticity, logarithm is performed for CO₂ emissions (CO₂), green innovation (GI), economic development (A), population (P), and foreign direct investment (FDI). The following are not suitable for logarithmic processing: The institutional quality (IQ), ranging between [-2.5, 2.5], industrial structure (IS), energy intensity (EI), and urbanization (UR) are ratio data, and interaction items are all standardized.

3 CEADs is available at http://www.ceads.net/data/, https://figshare.com/collections/China_CO2_emission_accounts_1997-2015/3936484/1, and https://figshare.com/collections/China_CO2_emission_accounts_2016-2017/4658168

4 http://info.worldbank.org/governance/wgi/#home

Additional information

Funding

This work was supported by the Social Science Foundation Think Tank Project of Hunan Province [19ZWB29], by the National Natural Science Foundation of China [71703171], and by the National Social Science Foundation of China [19CGL043].