Does economic growth targets setting lead to carbon emissions? An empirical study from China.

ABSTRACT

Accurately identifying the historical causes of carbon emissions in the process of national economic development is an important basis for developing countries to achieve carbon emission reduction. This paper explores the intrinsic institutional causes of China's high CO2 emission growth based on the characteristic economic growth target system of China, and attempts to empirically test the environmental effects behind this system. The results of the study show that the setting of absolute economic growth targets significantly increases the carbon dioxide emissions of cities under horizontal competition, and the setting of relative economic growth targets exacerbates the above carbon emission effect under vertical competition. In addition, the heterogeneity analysis shows that the carbon emission effect of setting economic growth targets is stronger in resource-dependent cities and cities with a lower level of economic development. Mechanism tests show that economic growth targets not only significantly increases total fossil energy consumption and reduces energy efficiency at the firm level, but also leads to the increase of energy consumption and the reduction of energy efficiency at the industry level. The findings of this study provide an intrinsic institutional explanation for China's high carbon emissions and provide useful guidance for the design of mechanisms to achieve large-scale carbon emission reductions in developing countries.