Reduce Production or Increase Efficiency? Hazardous Air Pollutants Regulation, Energy Use and the Synergistic Effect On Industrial Enterprises’ Carbon Emission

Abstract : The threat of climate change resulting from carbon dioxide emissions is one of the greatest threats to human survival and natural ecosystems. However, it is still unclear whether hazardous air pollutant regulations will simultaneously reduce air pollutant emissions and greenhouse gas emissions. If environmental regulations encourage the firm to use more pollution abatement equipment, these facilities may consume more energy and firm's carbon emissions may increase. In contrast, if environmental regulations encourage firms to adopt source treatment, firms may reduce production or improve energy efficiency. As a result, carbon emissions may decline. Using a firm-level panel dataset, we adopt the difference-in-differences (DID) model to examine the impact of hazardous air pollutant regulation on carbon emissions in China. According to our analysis, China's Key Cities for Air Pollution Control to Meet the Standards within the Time Limit (APCMS) policy reduced carbon emissions by 5%. Further research revealed that the policy significantly improved energy efficiency and innovation performance rather than reduced production scale. Based on these results, hazardous air pollutant regulations can simultaneously reduce air pollutant emissions and carbon emissions. Hence, the reform of carbon policy should be based on a more synergistic approach