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How does digital technology innovation drive synergistic reduction of pollution and carbon emissions? The U-shaped effect in China

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  • Zhao, Xiaonan
  • Pi, Zhenwen
  • Guo, Zhengquan

Abstract

With the rapid advancement of digital technology and growing emphasis on environmental protection and climate change, exploring the potential of digital technology innovation (DTI) in facilitating the synergistic reduction of pollution and carbon emissions (SRPC) is of significant importance. Using panel data from 281 Chinese cities between 2006 and 2022 and employing a nonlinear modeling approach, this study empirically examines the impact of DTI on SRPC. The results reveal a nonlinear U-shaped relationship between DTI and SRPC, characterized by an initial inhibitory effect followed by a positive promotional effect. Mechanism analysis indicates that DTI influences SRPC in a U-shaped manner—first inhibiting and later promoting—through energy efficiency and energy structure optimization, while exerting a continuous positive effect through enhanced government environmental attention. These three pathways collectively explain the U-shaped relationship between DTI and SRPC. Heterogeneity analysis shows that the U-shaped impact of DTI on SRPC is significant in large cities, but not apparent in small cities. Moreover, this U-shaped relationship is more pronounced in low-carbon pilot cities. These findings provide new insights into how DTI can contribute to urban sustainable development and offer valuable references for policymaking.

Suggested Citation

  • Zhao, Xiaonan & Pi, Zhenwen & Guo, Zhengquan, 2026. "How does digital technology innovation drive synergistic reduction of pollution and carbon emissions? The U-shaped effect in China," International Review of Economics & Finance, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:reveco:v:105:y:2026:i:c:s1059056025010445
    DOI: 10.1016/j.iref.2025.104881
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