An Inverted-U Impact of Environmental Regulations on Carbon Emissions in China’s Iron and Steel Industry: Mechanisms of Synergy and Innovation Effects

Abstract

Based on a panel data of China’s iron and steel (IS) industry from 2000 to 2014, this paper explores the impact of environmental regulations on CO2 emissions in the industry. The results show that there is a clear inverted-U relationship between environmental regulations and CO2 emissions in the IS industry. Additionally, there are regional heterogeneity and regulatory intensity on the impact of environmental regulations on CO2 emissions. The results in the eastern region are consistent with the whole sample results, while the upward trend in the central region and the downward trend in the western region together lay the basis for the inverted-U shape of the whole sample. High environmental regulations affect CO2 emissions in an inverted-U shape, while low environmental regulations present a U shape. The mechanisms of environmental regulations affecting CO2 emissions are synergy effect and technological innovation effect. Finally, this paper proposes some policy recommendations according to the above findings.