Can development zones reduce energy consumption and carbon emissions of enterprises? Evidence from China

Under the target of “carbon neutrality”, it is critical to test whether the establishment of development zones, as a widely presenting industrial policy, can promote carbon emissions reduction. Utilizing China Industrial Enterprise Database and China Industrial Enterprise Pollution Emission and Governance Database from 2000 to 2013, this paper employs a set of empirical methods including multiple-period difference-in-difference and propensity score matching tests to investigate the impact of development zone policy on carbon dioxide emissions and energy consumption of firms in the zones. The empirical findings demonstrate that the establishment of development zones can effectively promote energy saving, reduce carbon dioxide emissions and optimize energy structure by increasing firms’ use of clean energy sources. Furthermore, mechanism analysis shows that the establishment of development zones promotes technological innovation and exports of firms in the zones, leading to their energy saving and carbon emissions reductions.