How does the internet economy affect CO2 emissions? Evidence from China

To achieve China’s Nationally Determined Contributions (NDCs), the development of the Internet economy has become an important choice for emission-reduction strategies, but the relevant emission-reduction mechanisms are still unclear. Accordingly, by constructing a system-generalized method of moments (system-GMM) approach following the STIRPAT framework, we explore the effect of the Internet economy on carbon dioxide (CO2) emissions through the mediating effect of traffic demand and the moderating effect of technological innovation using panel data of 30 provinces in China from 2006 to 2017. The results indicate that: (1) the Internet economy mitigates CO2 emissions in China; for example, a 1% increase in the Internet economy indexes causes a 0.135% decrease in CO2 emissions; (2) the development of the Internet economy has an indirect effect on CO2 emissions by decreasing traffic demand; (3) technological innovation is a favorable moderator that expands the direct and indirect emission-reduction effects of the Internet economy; and (4) the mitigating effect of the Internet economy on CO2 emissions is significant at the lower quantiles (i.e. 10th, 25th, and 50th), which suggests the Internet economy is a superior predictor of CO2 emissions.