On green credits and carbon productivity in China

Abstract: Based on panel data from 30 provinces over the period of 2003–2016, this study uses the spatial econometric model to examine the effect of green credits on carbon productivity. The research findings show that there is a significant positive correlation between green credits and carbon productivity among provinces during this period. Provinces with high levels of carbon productivity (green credits) are also geographically adjacent or economically close to provinces with high levels and vice versa. Regression results of the whole sample show that green credits not only promote carbon productivity, but also have a positive spatial spillover effect. Similar regression results using regional sub-samples indicate that the direct promotion effect and spatial spillover effect of green credits on carbon productivity are more obvious in the central and western regions than in the eastern parts of the country. The research findings have important and relevant policy implications as far as the relationship between green credits and carbon productivity is concerned.

  Under the pressure of carbon emission reduction, the development of green finance represented by green credits is an important direction for the future development of China’s financial industry. This paper constructs a spatial Durbin model using the geographical adjacency matrix and the economic distance matrix to empirically analyze the impact of green credits on China’s carbon productivity. The key research findings are summarized as follows.

  Firstly, there is a high degree of spatial correlation between carbon productivity and green credits in China at the national as well as the regional levels, with a clear tendency of regional aggregation in geographical distribution. The results of the national-level estimation show that green credits have a significant effect on carbon productivity of a particular province and the neighboring areas. The spatial spillover effect is larger than the direct effect, with the total effect of green credits being significantly positive.

  Secondly, at the regional level, the direct and total effects of green credits are positive in the east and central-west regions, but the indirect effect is only positive in the central-west regions. The total effect in the central-west region is larger than that in the east region, implying that the carbon productivity improvement effect and the spatial spillover effect of green credits in China mainly come from the central-west region.

  Finally, the results of the other control variables show that the level of economic development can increase carbon productivity, the coal-based energy structure can hinder the increase of carbon productivity, and industrial structure as well as technological progress does not significantly increase carbon productivity.

  Based on the above findings, to promote the early realization of a low-carbon economy and improve carbon productivity in China, this paper puts forward the following policy recommendations.

  Firstly, based on the fact that green credits have a positive promotion effect on carbon productivity and the spatial spill- over effect of green credits is significant, China can promote carbon productivity by increasing the scale of green credits, and local governments should choose to move from competition to cooperation in the development process, strengthen technology exchange, improve the market mobility of high- end human resources, and form high-value carbon productivity agglomerations as soon as possible.

  Secondly, based on the fact that the enhancement effect is stronger in the central and western regions and the spatial effect is more significant, the government may focus more on increasing the scale of green credits in the central and western regions while strengthening technology exchanges in the eastern regions to create a better environment for the synergistic development of the eastern provinces.

  Finally, general technological progress did not improve carbon productivity, but the essence of improving carbon productivity is to improve green technology. As a result, provincial governments should guide enterprises to invest more in green technology research and strengthen their ability to absorb green technologies.

Author contribution

• Shujie Yao, conceptualization, formal analysis, methodology, validation, and editing.
• Xiaoqian Zhang, conceptualization, methodology, data collection, and writing—review and editing.
• Weiwei Zheng, conceptualization and writing—original draft.

Funding

This research is financially supported by

• the National Natural Science Foundation of China(71673033)
• the National Social Science Foundation of China(18ZDA005)
• the Postdoctoral Fund of Chongqing Municipal Natural Science Foundation(cstc2020jcyjbshX0102)
• the Fundamental Research Funds for the Central Universities(NO.2020CDJSK02PT26).

The authors are solely responsible for any error or omission herein.

Data availability

The datasets used during the current study are available from the corresponding author on reasonable request.