The effect of environmental policy tools on regional green innovation: Evidence from China

Abstract Environmental policy tools are an important means of improving environmental pollution and promoting regional green development. Working from a heterogeneous perspective, this study constructed a model using several different types of environmental policy tools and green innovation. Data from China’s 30 provinces, spanning the period 1997 to 2014, was selected as the sample, and a multiple regression analysis and difference-in-differences model was used to analyze the data. The results showed that command-and-control type environmental policy tools had the most positive effect on innovations relating to end-of-pipe treatment and green products. By contrast, their effect on clean production technology lacked significance. Pollution charges played a positive role in promoting green process innovation, but a negative role in green product innovation. In addition, the overall effect of the emission trading mechanism was not significant. Despite this, the emission trading system that was independently implemented within some provinces was more successful than the system used within trial provinces that were identified and approved by the central government.