How the digital economy is empowering green strategies for breaking carbon lock-in.

ABSTRACT

In the era of climate change and carbon neutrality, China is actively coping with its carbon lock-in dilemma. In this context, the development of the digital economy is considered a possible path to carbon unlocking. This study contributes to the literature by providing a comprehensive analysis of how the digital economy can be leveraged to address carbon lock-in, highlighting the importance of formal environmental regulation and informal environmental regulation in enhancing this effect. Accordingly, following findings are highlighted. (1) Our primary findings provide strong evidence on the negative effect of the digital economy on carbon lock-in; by implication, improving the digital economy is an efficient measure for eradicating carbon lock-in. (2) The digital economy shows the greatest marginal impact on industrial lock-in, while its inhibiting effect on behavior lock-in is the least pronounced. Moreover, the digital economy plays a prominent role in curbing carbon lock-in in provinces with a higher level of physical, human, and social capital. And the asymmetric impacts of the digital economy on carbon lock-in are significant at most quantiles. (3) Environmental regulation is a significant moderator. Put differently, the synergy of formal environmental regulation and the digital economy, as well as informal environmental regulation and the digital economy, are important means to break carbon lock-in. (4) The carbon lock-in mitigation effect of the digital economy is caused mainly by increasing technical market turnover and the efficiency of energy consumption.