How does government environmental regulation “unlock” carbon emission effect?—evidence from China

ABSTRACT

The disordered emission of carbon dioxide is an important sign of market failure, making it a must to “unlock” the high emission effect of carbon dioxide by effective means. From the perspective of technological innovation, on the basis of the data of time series from 1985 to 2014 in Beijing, China, this article empirically analyzed the relationship between environmental regulation and carbon emissions through VAR model, impulse response function, and variance decomposition. It is concluded that in a short term, environmental regulation has an inhibitory effect on carbon emissions and technological innovation and has a positive effect on industrial structure. In a long term, environmental regulation can enhance the technological innovation and reduce the effect of carbon emissions, which may even eliminate it. Generally, environmental regulation and technological innovation have a greater impact on carbon dioxide emissions, while the industrial structure has a relatively small effect. Finally, the targeted countermeasures and suggestions are put forward.