IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v176y2022ics0040162522000038.html
   My bibliography  Save this article

Environmental regulation, technology innovation, and low carbon development: Revisiting the EKC Hypothesis, Porter Hypothesis, and Jevons’ Paradox in China's iron & steel industry

Author

Listed:
  • Wang, Xiaoling
  • Zhang, Tianyue
  • Nathwani, Jatin
  • Yang, Fangming
  • Shao, Qinglong

Abstract

By comprehensively evaluating the potential effectiveness of environmental regulations and technical innovation in facilitating emission reductions, this study highlights the complexity of the relationships — short- and long-term as well as dynamic responses — between carbon dioxide (CO2) emissions, energy efficiency, economic performance, environmental regulation and technological innovation using the vector error correction model (VECM) by incorporating exogenous policy factors based on China IS industrial data during the period 1995–2017. Empirical analysis indicates: (a) the existence of the Environmental Kuznets Curve (EKC) Hypothesis is established given an inverted U-shaped curve of CO2 emissions along with the increase of industrial output value; (b) weak Porter Hypothesis (pH) stands in the short term as innovation can be spurred by environmental regulation, whereas strong pH is supported in both the short and long term when energy efficiency and emission reduction can be achieved under strict regulations;(c) Jevons’ Paradox is confirmed since the emissions increment brought by the massive increase in demand is greater than the emission reduction volume brought by energy efficiency improvement and; (d) Environmental regulation exerts a critical role in emission reduction, especially for the policies with market-based and common-and-control functions implemented since 2006. Corresponding policy implications to facilitate low-carbon transition of the ISI are proposed.

Suggested Citation

  • Wang, Xiaoling & Zhang, Tianyue & Nathwani, Jatin & Yang, Fangming & Shao, Qinglong, 2022. "Environmental regulation, technology innovation, and low carbon development: Revisiting the EKC Hypothesis, Porter Hypothesis, and Jevons’ Paradox in China's iron & steel industry," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    • Handle: RePEc:eee:tefoso:v:176:y:2022:i:c:s0040162522000038
    DOI: 10.1016/j.techfore.2022.121471
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162522000038
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2022.121471?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liu, Yunqiang & Zhu, Jialing & Li, Eldon Y. & Meng, Zhiyi & Song, Yan, 2020. "Environmental regulation, green technological innovation, and eco-efficiency: The case of Yangtze river economic belt in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    2. Wang, Xiaolei & Wen, Xiaohui & Xie, Chunping, 2018. "An evaluation of technical progress and energy rebound effects in China's iron & steel industry," Energy Policy, Elsevier, vol. 123(C), pages 259-265.
    3. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    4. Dechezlepretre, Antoine & Sato, Misato, 2017. "The impacts of environmental regulations on competitiveness," LSE Research Online Documents on Economics 77700, London School of Economics and Political Science, LSE Library.
    5. Rahman, Mohammad Mafizur & Kashem, Mohammad Abul, 2017. "Carbon emissions, energy consumption and industrial growth in Bangladesh: Empirical evidence from ARDL cointegration and Granger causality analysis," Energy Policy, Elsevier, vol. 110(C), pages 600-608.
    6. Antoine Dechezleprêtre & Misato Sato, 2017. "The Impacts of Environmental Regulations on Competitiveness," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 183-206.
    7. Zhang, Fan & Deng, Xiangzheng & Phillips, Fred & Fang, Chuanglin & Wang, Chao, 2020. "Impacts of industrial structure and technical progress on carbon emission intensity: Evidence from 281 cities in China," Technological Forecasting and Social Change, Elsevier, vol. 154(C).
    8. Ouyang, Xiaoling & Li, Qiong & Du, Kerui, 2020. "How does environmental regulation promote technological innovations in the industrial sector? Evidence from Chinese provincial panel data," Energy Policy, Elsevier, vol. 139(C).
    9. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    10. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    11. A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
    12. Wu, Feng & Huang, Ningyu & Zhang, Fan & Niu, Lulu & Zhang, Yali, 2020. "Analysis of the carbon emission reduction potential of China's key industries under the IPCC 2 °C and 1.5 °C limits," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    13. Xu, Bin & Lin, Boqiang, 2016. "Regional differences in the CO2 emissions of China's iron and steel industry: Regional heterogeneity," Energy Policy, Elsevier, vol. 88(C), pages 422-434.
    14. Mousa, Elsayed & Wang, Chuan & Riesbeck, Johan & Larsson, Mikael, 2016. "Biomass applications in iron and steel industry: An overview of challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 1247-1266.
    15. Lin, Boqiang & Wang, Xiaolei, 2015. "Carbon emissions from energy intensive industry in China: Evidence from the iron & steel industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 746-754.
    16. Lin, Boqiang & Yang, Fang & Liu, Xia, 2013. "A study of the rebound effect on China's current energy conservation and emissions reduction: Measures and policy choices," Energy, Elsevier, vol. 58(C), pages 330-339.
    17. Wang, Yun & Sun, Xiaohua & Guo, Xu, 2019. "Environmental regulation and green productivity growth: Empirical evidence on the Porter Hypothesis from OECD industrial sectors," Energy Policy, Elsevier, vol. 132(C), pages 611-619.
    18. Wang, Huiqing & Wei, Weixian, 2020. "Coordinating technological progress and environmental regulation in CO2 mitigation: The optimal levels for OECD countries & emerging economies," Energy Economics, Elsevier, vol. 87(C).
    19. Li, Jianglong & Lin, Boqiang, 2017. "Rebound effect by incorporating endogenous energy efficiency: A comparison between heavy industry and light industry," Applied Energy, Elsevier, vol. 200(C), pages 347-357.
    20. Xu, Bin & Lin, Boqiang, 2017. "Assessing CO2 emissions in China's iron and steel industry: A nonparametric additive regression approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 325-337.
    21. Cenjie Liu & Chunbo Ma & Rui Xie, 2020. "Structural, Innovation and Efficiency Effects of Environmental Regulation: Evidence from China’s Carbon Emissions Trading Pilot," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 741-768, April.
    22. Wu, Zhanglan & Shao, Qinglong & Su, Yantao & Zhang, Dan, 2021. "A socio-technical transition path for new energy vehicles in China: A multi-level perspective," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    23. Sun, Wenqiang & Wang, Qiang & Zhou, Yue & Wu, Jianzhong, 2020. "Material and energy flows of the iron and steel industry: Status quo, challenges and perspectives," Applied Energy, Elsevier, vol. 268(C).
    24. Kurt M. Cuffey & Françoise Vimeux, 2001. "Covariation of carbon dioxide and temperature from the Vostok ice core after deuterium-excess correction," Nature, Nature, vol. 412(6846), pages 523-527, August.
    25. Wang, Xiaolei & Lin, Boqiang, 2016. "How to reduce CO2 emissions in China׳s iron and steel industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 1496-1505.
    26. Tan, Xiaomei, 2010. "Clean technology R&D and innovation in emerging countries--Experience from China," Energy Policy, Elsevier, vol. 38(6), pages 2916-2926, June.
    27. Yin, Jianhua & Zheng, Mingzheng & Chen, Jian, 2015. "The effects of environmental regulation and technical progress on CO2 Kuznets curve: An evidence from China," Energy Policy, Elsevier, vol. 77(C), pages 97-108.
    28. Chen, Jiandong & Gao, Ming & Shahbaz, Muhammad & Cheng, Shulei & Song, Malin, 2021. "An improved decomposition approach toward energy rebound effects in China: Review since 1992," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    29. Liu, Kai & Xue, Mingyue & Peng, Mengjie & Wang, Chengxin, 2020. "Impact of spatial structure of urban agglomeration on carbon emissions: An analysis of the Shandong Peninsula, China," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    30. Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November.
    31. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    32. Ai, Hongshan & Wu, Xiaofei & Li, Ke, 2020. "Differentiated effects of diversified technological sources on China's electricity consumption: Evidence from the perspective of rebound effect," Energy Policy, Elsevier, vol. 137(C).
    33. Pan, Xiongfeng & Ai, Bowei & Li, Changyu & Pan, Xianyou & Yan, Yaobo, 2019. "Dynamic relationship among environmental regulation, technological innovation and energy efficiency based on large scale provincial panel data in China," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 428-435.
    34. Li, Songran & Shao, Qinglong, 2021. "Exploring the determinants of renewable energy innovation considering the institutional factors: A negative binomial analysis," Technology in Society, Elsevier, vol. 67(C).
    35. Wang, Han & Chen, Zhoupeng & Wu, Xingyi & Nie, Xin, 2019. "Can a carbon trading system promote the transformation of a low-carbon economy under the framework of the porter hypothesis? —Empirical analysis based on the PSM-DID method," Energy Policy, Elsevier, vol. 129(C), pages 930-938.
    36. Wesseling, J.H. & Lechtenböhmer, S. & Åhman, M. & Nilsson, L.J. & Worrell, E. & Coenen, L., 2017. "The transition of energy intensive processing industries towards deep decarbonization: Characteristics and implications for future research," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 1303-1313.
    37. Yuanying Chi & Zerun Liu & Xu Wang & Yangyi Zhang & Fang Wei, 2021. "Provincial CO 2 Emission Measurement and Analysis of the Construction Industry under China’s Carbon Neutrality Target," Sustainability, MDPI, vol. 13(4), pages 1-15, February.
    38. Li, Xiaoyan & Xu, Hengzhou, 2020. "The Energy-conservation and Emission-reduction Paths of Industrial sectors: Evidence from Chinas 35 industrial sectors," Energy Economics, Elsevier, vol. 86(C).
    39. Ren, Lei & Zhou, Sheng & Peng, Tianduo & Ou, Xunmin, 2021. "A review of CO2 emissions reduction technologies and low-carbon development in the iron and steel industry focusing on China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    40. Filippini, Massimo & Geissmann, Thomas & Karplus, Valerie J. & Zhang, Da, 2020. "The productivity impacts of energy efficiency programs in developing countries: Evidence from iron and steel firms in China," China Economic Review, Elsevier, vol. 59(C).
    41. Arifur Rahman & S. M. Woahid Murad & Fayyaz Ahmad & Xiaowen Wang, 2020. "Evaluating the EKC Hypothesis for the BCIM-EC Member Countries under the Belt and Road Initiative," Sustainability, MDPI, vol. 12(4), pages 1-20, February.
    42. Haikun Wang & Xi Lu & Yu Deng & Yaoguang Sun & Chris P. Nielsen & Yifan Liu & Ge Zhu & Maoliang Bu & Jun Bi & Michael B. McElroy, 2019. "China’s CO2 peak before 2030 implied from characteristics and growth of cities," Nature Sustainability, Nature, vol. 2(8), pages 748-754, August.
    43. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    44. Zhexuan Qin & Ilhan Ozturk, 2021. "Renewable and Non-Renewable Energy Consumption in BRICS: Assessing the Dynamic Linkage between Foreign Capital Inflows and Energy Consumption," Energies, MDPI, vol. 14(10), pages 1-17, May.
    45. Du, Kerui & Li, Pengzhen & Yan, Zheming, 2019. "Do green technology innovations contribute to carbon dioxide emission reduction? Empirical evidence from patent data," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 297-303.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hou, Xiang & Hu, Qianlin & Liang, Xin & Xu, Jingxuan, 2023. "How do low-carbon city pilots affect carbon emissions? Staggered difference in difference evidence from Chinese firms," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 664-686.
    2. Xie, Ronghui & Teo, Thompson S.H., 2022. "Green technology innovation, environmental externality, and the cleaner upgrading of industrial structure in China — Considering the moderating effect of environmental regulation," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    3. Kraus, Sascha & Kumar, Satish & Lim, Weng Marc & Kaur, Jaspreet & Sharma, Anuj & Schiavone, Francesco, 2023. "From moon landing to metaverse: Tracing the evolution of Technological Forecasting and Social Change," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    4. Zhang, Dongna & Chen, Xihui Haviour & Lau, Chi Keung Marco & Xu, Bing, 2023. "Implications of cryptocurrency energy usage on climate change," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    5. Zhang, Zixuan & Chen, Huaichao, 2022. "Dynamic interaction of renewable energy technological innovation, environmental regulation intensity and carbon pressure: Evidence from China," Renewable Energy, Elsevier, vol. 192(C), pages 420-430.
    6. Li, Kai & Qi, Shouzhou & Shi, Xunpeng, 2023. "Environmental policies and low-carbon industrial upgrading: Heterogenous effects among policies, sectors, and technologies in China," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    7. Soltanzadeh, Javad & Blind, Knut & Elyasi, Mehdi, 2023. "Exploring how regulators face platform business issues in the lifecycle stages: Evidence of iranian ride-hailing platform business," Telecommunications Policy, Elsevier, vol. 47(7).
    8. Jahanger, Atif & Zubair Chishti, Muhammad & Chukwuma Onwe, Joshua & Awan, Ashar, 2022. "How far renewable energy and globalization are useful to mitigate the environment in Mexico? Application of QARDL and spectral causality analysis," Renewable Energy, Elsevier, vol. 201(P1), pages 514-525.
    9. Awan, Ashar & Alnour, Mohammed & Jahanger, Atif & Onwe, Joshua Chukwuma, 2022. "Do technological innovation and urbanization mitigate carbon dioxide emissions from the transport sector?," Technology in Society, Elsevier, vol. 71(C).
    10. Hu, Yingde & Bai, Wensong & Farrukh, Muhammad & Koo, Chun Kwong, 2023. "How does environmental policy uncertainty influence corporate green investments?," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    11. Hu, Haisheng & Zhao, Laijun & Dong, Wanhao, 2023. "How to achieve the goal of carbon peaking by the energy policy? A simulation using the DCGE model for the case of Shanghai, China," Energy, Elsevier, vol. 278(PA).
    12. Lena, Daniela & Pasurka, Carl A. & Cucculelli, Marco, 2022. "Environmental regulation and green productivity growth: Evidence from Italian manufacturing industries," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    13. Zhang, Yixiang & Fu, Bowen, 2023. "Social trust contributes to the reduction of urban carbon dioxide emissions," Energy, Elsevier, vol. 279(C).
    14. Shobande, Olatunji A. & Ogbeifun, Lawrence, 2023. "Pooling cross-sectional and time series data for estimating causality between technological innovation, affluence and carbon dynamics: A comparative evidence from developed and developing countries," Technological Forecasting and Social Change, Elsevier, vol. 187(C).
    15. Zhang, Dan & Zheng, Mingbo & Feng, Gen-Fu & Chang, Chun-Ping, 2022. "Does an environmental policy bring to green innovation in renewable energy?," Renewable Energy, Elsevier, vol. 195(C), pages 1113-1124.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huang, Youxing & Xu, Qi & Zhao, Yanping, 2021. "Short-run pain, long-run gain: Desulfurization investment and productivity," Energy Economics, Elsevier, vol. 102(C).
    2. Zhang, Dan & Zheng, Mingbo & Feng, Gen-Fu & Chang, Chun-Ping, 2022. "Does an environmental policy bring to green innovation in renewable energy?," Renewable Energy, Elsevier, vol. 195(C), pages 1113-1124.
    3. Du, Kerui & Cheng, Yuanyuan & Yao, Xin, 2021. "Environmental regulation, green technology innovation, and industrial structure upgrading: The road to the green transformation of Chinese cities," Energy Economics, Elsevier, vol. 98(C).
    4. Liu, Donghua & Ren, Shenggang & Li, Wenming, 2022. "SO2 emissions trading and firm exports in China," Energy Economics, Elsevier, vol. 109(C).
    5. Peng, Jiaying & Xie, Rui & Ma, Chunbo & Fu, Yang, 2021. "Market-based environmental regulation and total factor productivity: Evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 394-407.
    6. de Miguel, Carlos & Pazó, Consuelo, 2017. "Environmental protection, innovation and price-setting behavior in Spanish manufacturing firms," Energy Economics, Elsevier, vol. 68(S1), pages 116-124.
    7. Fabrizi, Andrea & Guarini, Giulio & Meliciani, Valentina, 2018. "Green patents, regulatory policies and research network policies," Research Policy, Elsevier, vol. 47(6), pages 1018-1031.
    8. Zhou, Peng & Song, Frank M. & Huang, Xiaoqi, 2023. "Environmental regulations and firms' green innovations: Transforming pressure into incentives," International Review of Financial Analysis, Elsevier, vol. 86(C).
    9. Koch, Nicolas & Themann, Michael, 2022. "Catching up and falling behind: Cross-country evidence on the impact of the EU ETS on firm productivity," Resource and Energy Economics, Elsevier, vol. 69(C).
    10. Xie, Yu & Wu, Desheng & Li, Xiaoyan & Tian, Suhua, 2023. "How does environmental regulation affect productivity? The role of corporate compliance strategies," Economic Modelling, Elsevier, vol. 126(C).
    11. Liu, Duan & Yu, Nizhou & Wan, Hong, 2022. "Does water rights trading affect corporate investment? The role of resource allocation and risk mitigation channels," Economic Modelling, Elsevier, vol. 117(C).
    12. Ren, Shenggang & Hu, Yucai & Zheng, Jingjing & Wang, Yangjie, 2020. "Emissions trading and firm innovation: Evidence from a natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    13. Themann, Michael & Koch, Nicolas, 2021. "Catching up and falling behind: Cross-country evidence on the impact of the EU ETS on firm productivity," Ruhr Economic Papers 904, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Zhang, Yijun & Li, Xiaoping & Song, Yi & Jiang, Feitao, 2021. "Can green industrial policy improve total factor productivity? Firm-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 51-62.
    15. Ederington, Josh & Paraschiv, Mihai & Zanardi, Maurizio, 2022. "The short and long-run effects of international environmental agreements on trade," Journal of International Economics, Elsevier, vol. 139(C).
    16. Galeotti, Marzio & Salini, Silvia & Verdolini, Elena, 2020. "Measuring environmental policy stringency: Approaches, validity, and impact on environmental innovation and energy efficiency," Energy Policy, Elsevier, vol. 136(C).
    17. Marin, Giovanni & Vona, Francesco, 2021. "The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015," European Economic Review, Elsevier, vol. 135(C).
    18. repec:hal:spmain:info:hdl:2441/1jrfjrj6fp8t6q12fv5lra520c is not listed on IDEAS
    19. Yi Li & Lili Ding & Yongliang Yang, 2020. "Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China," Sustainability, MDPI, vol. 12(4), pages 1-19, February.
    20. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    21. Yu Zhang & Jie Wang & Jiakai Chen & Weizhong Liu, 2023. "Does environmental regulation policy help improve business performance of manufacturing enterprises? evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(5), pages 4335-4364, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:176:y:2022:i:c:s0040162522000038. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.