Digital economy and carbon emission reduction: evidence from China

ABSTRACT China confronts a challenging dilemma between environmental protection and economic development as it endeavors to achieve dual carbon goals. To discern a feasible developmental path, this paper designs a comprehensive index of the digital economy encompassing four dimensions: input, production, output, and consumption, conducts an empirical analysis to explore the relationship between the digital economy and carbon emissions by using a two-way fixed effect model with China’s provincial data from 2013 to 2019, and suggests that the digital economy can significantly reduce carbon emissions and carbon intensity. Public low carbon awareness and green innovation are mechanisms that mediate the association between the digital economy and carbon emissions. The carbon reduction effect varies across dimensions of the digital economy, regions, and sources of carbon emissions. These empirical findings provide valuable insights and policy implications to effectively achieve China’s dual carbon goals.