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Does carbon intensity constraint policy improve industrial green production performance in China? A quasi-DID analysis

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  • Yang, Zhenbing
  • Fan, Meiting
  • Shao, Shuai
  • Yang, Lili

Abstract

Whether or not carbon regulation policies can achieve the “double dividend” of carbon reduction and economic growth is vital for realizing the sustainable development of a certain country. This paper investigates the effects of a carbon intensity constraint policy (CICP) that the Chinese government put forward in 2009 on the green production performance (GPP, i.e., the environmentally sensitive productivity growth considering carbon emissions to be an undesirable output) of industrial sector (the largest carbon emitter in China) for the first time. Based on a non-radial and non-oriented DEA (data envelopment analysis) measure method, we first adopt the Luenberger indicator to estimate the GPP of China's 36 industrial sub-sectors over 2001–2013. Furthermore, regarding the CICP proposed in 2009 as a natural experiment, we assess the effects of such a policy on China's industrial GPP by using the quasi-difference-in-differences (quasi-DID) method. The results show that China's industrial GPP presents a circuitous downward trend after experiencing a transient rise. The heterogeneity of the GPP among industrial sub-sectors exists, and the increase in industrial output is the crucial driver of improving the GPP. China's industrial GPP has deteriorated after implementing the CICP, and the negative effect of such a policy is larger and larger over time. Such empirical results indicate that although the carbon regulation policy in China has achieved a surface success, the policy causes a factor substitution effect to hinder the improvement of the GPP. Therefore, China's current CICP is not effective in realizing the “double dividend” of carbon reduction and industrial growth.

Suggested Citation

  • Yang, Zhenbing & Fan, Meiting & Shao, Shuai & Yang, Lili, 2017. "Does carbon intensity constraint policy improve industrial green production performance in China? A quasi-DID analysis," Energy Economics, Elsevier, vol. 68(C), pages 271-282.
    • Handle: RePEc:eee:eneeco:v:68:y:2017:i:c:p:271-282
    DOI: 10.1016/j.eneco.2017.10.009
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    More about this item

    Keywords

    Carbon intensity constraint policy; Green production performance; Luenberger indicator; Quasi-DID; Industrial sector; China;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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