Green Paradox or Forced Emission Reduction—The Dual Effects of Environmental Regulation on Carbon Emissions

Abstract

In response to global climate change, China made a commitment about carbon emissions at the UN General Assembly. It will strive to achieve carbon peaking by 2030 and carbon neutrality by 2060. To help China successfully meet its carbon emissions targets this study examines the impact of environmental regulation on carbon emissions from a different perspective. Using panel data from 30 provinces in China as samples, this paper discusses the direct and indirect effect of environmental regulation on carbon emissions and explains the indirect process through four transmission paths: energy consumption structure, industrial structure, technological innovation, and foreign direct investment (FDI). The empirical results show that the direct effect of environmental regulation on carbon emissions presents an inverted U-shaped curve, it means that when the intensity level of environmental regulation is low, it mainly shows the green paradox effect, and with the continuous tightening of environmental laws, it turns into a forced emission reduction on carbon emissions. In addition, we found that under the constraint of environmental regulation conditions, the coal-based energy consumption is still the leading cause of carbon emissions; environmental regulations have contributed to the upgrading of industrial structure and technological advance, which indirectly play a positive role in carbon emission reduction. However, environmental regulation restrains the spillover effect and capital accumulation effect of FDI, which brings a specific degree of hindrance to technological progress and economic development, and is not conducive to carbon emission reduction. Therefore, we have made the following recommendations: China should make reasonable use of environmental policies to regulate carbon emissions according to the situation of each region, optimize the energy structure and increase the proportion of clean energy use, and improve the technology level of related industries to reduce carbon emissions by innovation.

The asymmetric effect of technological innovation on CO2 emissions in South Africa: New evidence from the QARDL approach

“…Researchers have been interested in the trending topics of environmental regulation and CO 2 emissions. The green paradox and forced emission reduction are two dominant positions on these topics (Yin et al, 2022). The green paradox contends that CO 2 emissions cannot be successfully reduced by environmental regulation.…”

“…The "green paradox" argument, which suggests that stringent environmental regulations will hasten the extraction and sale of fossil fuels and raise CO 2 emissions, may also be considered simultaneously (Gu et al, 2022). Contrarily, environmental regulation affects CO 2 emissions indirectly through four conductive channels, including FDI, technological innovation, industrial structure, and energy structure (Yin et al, 2022). Environmental regulations have increased the regulatory limit for polluting enterprises and limited their development, as shown in Figure 3 from an examination of the indirect functional route of industrial structure.…”

Investigating the impact of air pollution in selected African developing countries

“…The impacts of environmental policies on CO2 emissions can be divided into two types: direct impacts and indirect impacts. Direct effects are mainly achieved through coercive measures (regulations, command, and control) and financial instruments (Yin et al 2022 ).…”

The Effect of Air Pollution Control Auditing on Reducing Carbon Emissions: Evidence from China

“…The “green paradox” theory and the “forced emission reduction” theory were also formed about the effect of the environmental regulation on carbon emissions. Yin [ 27 ] confirmed that the direct effect of environmental regulation on carbon emissions showed a U-shaped curve, and environmental regulation had an indirectly impact on carbon emissions through the paths of energy consumption structure, industrial structure, technological innovation, and foreign direct investment. Ulucak et al [ 14 ] confirmed the positive role of environmental regulation on carbon emission reduction, and the current environmental control measures were successful in achieving pollution reduction targets in Brazil, Russia, India, China, and South Africa.…”

“…The choice of local government behavior was a critical factor for carbon emissions, while auditing had a remarkable impact on local government [ 39 ]. The effect of local atmospheric environment treatment depended mainly on the industrial structure and the pollutant discharge status of enterprises [ 27 , 40 , 41 ]. On this basis, air pollution control auditing compelled local governments to take two strategies to curb carbon emissions.…”