Role of Environmental Regulation and Renewable Energy Technology Innovation in Carbon Neutrality: A Sustainable Investigation From China

Abstract

With global climate change posing a major threat to human society, many countries have elevated “carbon neutrality” to a national strategy and put forward a vision of a zero-carbon future. In this process, environmental regulation (ER) and renewable energy technology innovation (RET) are important factors that contribute to achieving the carbon neutrality goal. Thus, this study employs a spatial econometric technique model to investigate the direct and indirect effects of ER and RET on environmental sustainability from both theoretical and empirical dimensions based on panel data of 30 Chinese provinces during 1998–2020. The results show that ER is not conducive to the improvement of environmental quality in local and neighboring areas, but it is beneficial to the reduction of CO2 emissions when the level of economic development is greater than the critical threshold of 9.126, i.e., the “inverted U-shaped” curve relationship. On the contrary, RET has a beneficial impact on the environment, but when the economic development level is greater than the critical threshold of 8.790, the carbon reduction effect of RET is reduced. Thus, the significance and magnitude of the carbon reduction effect of ER and RET depend on the regional economic development level, and excessive RE will have a suppressive effect on RET. The paper assisted policy makers in designing a holistic policy to enhance environmental sustainability through ER and RET, especially in the Chinese region.