Exploring the nonlinear association between environmental regulation and carbon intensity in China: The mediating effect of green technology

Environmental regulation and green technology are important to mitigate global warming, whereas few studies explored the role of green technology in environmental regulation on carbon intensity. This paper systematically reviews the literature on the relationship among environmental regulation, green technology, and carbon intensity, and assumes that green technology is a potential mediator of the impact of environmental regulation on carbon intensity. The advanced SBM model and the factor analysis method were performed to measure the relationships. To explore the mediating effect of green technology, the two-step econometric model and the nonlinear mediating effect model were applied to a panel dataset of 30 provinces in China spanning the period 2005-2016. The results show that there is an inverted U-shaped relationship between environmental regulation and green technology, and a U-shaped relationship between environmental regulation and carbon intensity. Green technology has a significant negative impact on carbon intensity. This proves that green technology is an important mediating variable on the relationship between environmental regulation and carbon intensity. Moreover, the current environmental regulation intensity lies before the inflection point of both the inverted Ushaped and the U-shaped curves. The effects of environmental regulation on green technology and carbon intensity in developed and developing regions follow an inverted U-shaped, and a U-shaped curve, respectively. Furthermore, the mediating effect in developing regions is significantly larger than that in developed regions. Finally, policy implications are given to reduce carbon intensity.