Carbon Dioxide Emissions Reduction through Technological Innovation: Empirical Evidence from Chinese Provinces

Abstract

Energy consumption and industrial activities are the primary sources of carbon emissions. As the “world’s factory” and the largest carbon emitter, China has been emphasizing the core role of technological innovation in promoting industrial structure upgrades (ISU) and energy efficiency (EE) to reduce carbon emissions from industrial production and energy consumption. This study investigated the mechanism (through ISU and EE) and spillover effect of technological innovation on carbon emission reduction using the panel dataset of 30 Chinese provinces from 2008 to 2019 and spatial econometrics models. The study concluded that (1) technological innovation had a negative direct effect on provincial carbon emissions, while it also showed a spatial spillover effect on neighboring provinces; (2) technological innovation had an indirect effect on provincial carbon emissions reduction through the mediation of energy efficiency improvement, while the mediation effect of industrial structure upgrading is not yet significant; and (3) the effect of technological innovation on carbon emission reduction showed heterogeneity in the eastern, central, and western regions of China. This study provided empirical and theoretical references to decision-makers in China and other developing countries in promoting technological and carbon control policies. More specifically, direct technology investment and indirect investment in industrial structure upgrades and energy efficiency could help with regional carbon emissions reduction.