Climate policy uncertainty influences carbon emissions in the semiconductor industry

Abstract

Industry carbon emissions have been increasing, yet there remains a dearth of research on the impacts of climate policy uncertainty. This study first explored the effects of climate policy uncertainty on the carbon emissions of semiconductor enterprises. We employed the Bidirectional Encoder Representations from Transformers (BERT) model. We constructed a Chinese climate policy uncertainty index based on electronic news entries to match the enterprise panel data structure from 2011 to 2022. The results showed an increase in climate policy uncertainty, which helped to reduce semiconductor enterprises’ carbon emissions. This effect was primarily achieved via two pathways. First, climate policy uncertainty leads to companies facing stricter environmental requirements, and these companies will proactively increase their investment in environmental, social, and governance standards to cope with the potential risks. Second, climate policy uncertainty is often accompanied by shifts in government climate policy. Governments will provide green subsidies to enterprises to achieve their policy goals. Furthermore, the policy uncertainty for the semiconductor industry could amplify the reducing effect of climate policy uncertainty on the carbon emissions from semiconductor enterprises. Climate policy uncertainty has a greater impact on non-state-owned and smaller semiconductor enterprises. Our study provides a new way to measure climate policy uncertainty, finds a new perspective based on climate policy uncertainty for exploring the potential impacts of corporate carbon emission reductions, bridges the gap between previous studies on enterprise carbon reductions and climate policy uncertainty, and offers a new path for governments to manage industrial carbon emissions.