Heterogeneous effects of China's low-carbon city pilots policy

Abstract

Global south countries, including China, have faced a challenging dilemma of reducing carbon emissions while maintaining rapid economic growth. The low-carbon city pilots (LCCPs) policy in China is a demonstration of how state power intervenes and commands national low-carbon development through voluntary policy tools. Our study, based on panel data of 331 cities from 2005 to 2019, evaluates the policy effect of all three batches of LCCPs and presents an analysis of time-varying effects through batch decomposition and synthetic difference-in-difference models. The study found that implementing low-carbon policies can significantly reduce total carbon emissions and carbon emissions per capita. However, the reduction in carbon emissions per unit of GDP is insignificant, and the policy effect varies according to the batches and their characteristics. The reduction effects in the first and second batches, as well as the insignificance or even increasing effects of the third batch, may be due to carbon leakage between different batches of LCCPs. Overall, this research provides novel and quantitative evidence on low-carbon development in China, making theoretical and empirical contributions to the field, and expanding econometric assessment methods to evaluate the effectiveness of environmental and climate change policies.

Keywords: Carbon leakage; Difference-in-difference; Low-carbon city pilot; Policy evaluation.