Low-carbon innovation effect of heterogeneous environmental regulation under the spatial spillover perspective

Abstract

To address the issue of divergent views among existing studies concerning the impact of environmental regulation (ER) on innovation, this paper utilizes a spatial panel Durbin model, leveraging provincial-level panel data from 2011 to 2021, to conduct an empirical investigation into the low-carbon innovation effect (LCIE) stemming from heterogeneous ER within the context of spatial spillovers. The empirical findings indicate that the varied ERs substantially stimulate local low-carbon technology innovation (LCTI), and both administrative and market-driven ERs exhibit pronounced positive spatial spillover effects on LCTI in adjacent regions. Moreover, the advancement of green finance significantly enhances the LCIE prompted by heterogeneous ER. From a temporal perspective, there exist diverse nonlinear correlation patterns between heterogeneous ER and LCTI, leading to distinct outcomes in the composition of LCTI. Furthermore, the role of green finance in augmenting the LCIE is emphasized through its facilitation of capital flow towards environmentally sustainable projects. The development of financial instruments such as green bonds, carbon credits, and environmental risk insurance not only supports local enterprises in adopting LCTI but also reinforces the positive externalities associated with ER across borders. The study also identifies that the nonlinear dynamics between heterogeneous ER and LCTI are influenced by factors such as regional economic development levels, industrial structures, and technological readiness.