Reduce production or increase efficiency? Hazardous air pollutants regulation, energy use, and the synergistic effect on industrial enterprises' carbon emission

Theoretically, the synergistic reduction strategy aimed at curbing both carbon and air pollutants emissions is more cost-effective than a singular emission abatement approach. Using a firm-level panel dataset, we employ the difference-in-differences (DID) method to estimate the impact of hazardous air pollutant regulation on carbon and air pollutants emissions in China. We found that the hazardous air pollutant regulation led to a decrease in firm-level carbon emissions and sulfur dioxide (SO2) emissions of 5% and 10%, respectively. Mechanism analysis shows that source reduction is the key for firms to achieve synergistic emission reductions. Furthermore, firms' source reduction strategies lie in improving energy efficiency, rather than reducing output. Environmental policy instruments should be based on a more synergistic approach.

Automated summary

The synergistic reduction strategy is more cost-effective than a singular emission abatement approach, and the regulation of hazardous air pollutants has a significant impact on carbon and air pollutants emissions in Chinese firms. Source reduction and improving energy efficiency are key factors in achieving synergistic emission reductions.