The impact of environmental regulation on carbon emissions and its mechanisms in Chinese cities

Abstract

Abstract As the principles of green development continue to be implemented, China’s government-led and market-assisted environmental regulatory framework has become a crucial tool for driving continuous ecological improvement and advancing the construction of a Beautiful China. Under the “dual carbon” strategy, elucidating the mechanisms by which environmental regulation affects urban carbon emissions is of critical importance for facilitating green transformation and promoting high-quality development. Using panel data from 272 prefecture-level and above cities in China from 2003 to 2020, this study develops a composite index to quantify the intensity of urban environmental regulation. It systematically analyzes the spatial-temporal distribution patterns and evolutionary trends of both urban carbon emissions and regulatory intensity. Employing spatial autoregressive models and mediation effect models, the paper explores the impact of environmental regulation on carbon emissions and the underlying mechanisms at play. The key findings are as follows: First, both carbon emissions and the intensity of environmental regulation in Chinese cities show significant spatial clustering characteristics. Carbon emissions have shown an overall upward trend over the years, with notable regional disparities. The intensity of environmental regulation has generally fluctuated upward, although regional differences remain prominent. Second, environmental regulation significantly curbs carbon emissions, providing empirical support for the “forced emission reduction hypothesis”. Third, technological progress plays a partial mediating role in the relationship between environmental regulation and carbon emissions, thereby validating the “porter hypothesis”. Fourth, foreign direct investment also partially mediates the impact of environmental regulation on carbon emissions, lending support to the “pollution halo hypothesis”. The main contribution of this study lies in the systematic construction of a multidimensional mechanism framework for environmental regulation from a spatial perspective. It comprehensively identifies both the direct effects and indirect transmission pathways through which environmental regulation influences carbon emissions, thereby extending the theoretical boundaries of research on regulatory effects. Moreover, the findings provide a solid theoretical foundation and practical reference for the formulation of regionally differentiated carbon reduction policies.