The Impact of Green Policy Instruments on CO 2 Emissions in China: The Threshold Effect and Regional Heterogeneity

This study investigated the impact of green investment and green tax on CO 2 emissions using panel data from 31 Chinese mainland provinces spanning a period from 2005 to 2021. It employed fixed effects models, double-threshold regression, heterogeneity analysis, and robustness tests to address two key gaps in the literature, namely the lack of research on the synergistic effect of these two policies and insufficient attention to regional differences. The results show that both green investment and green tax significantly inhibit CO 2 emissions nationwide, with green tax exerting a stronger effect. Green investment further exhibited a double-threshold moderating role, whereby green tax’s emission reduction efficacy was strongest when green investment was low, weakens in the medium range, and moderately rebounds at high green investment levels. Regionally, green investment significantly reduced emissions only in Eastern China, while green tax performed best in Western China and marginally effectively in Central China. Notably, the interaction between green tax and green investment presents distinct regional heterogeneity, whereby a significant substitution synergy was observed in Eastern China, while the synergistic effect was insignificant in Central and Western China. This study provides robust empirical evidence for designing regionally tailored green policies to advance China’s low-carbon transition.