The Impact of Two-wheel Innovation Drive on China 's Carbon Emissions

Abstract

The two-wheel innovation drive comprising technological innovation alongside institutional innovation serves as a crucial driving force for reducing carbon emissions and promoting the realization of dual carbon goals. Based upon the effective measurement and construction of an index system for technological innovation and institutional innovation, this paper selects panel data from 30 provinces, municipalities, and autonomous regions in China spanning from 2005 to 2019. Employing a two-way fixed effects model, it empirically examines the impact of the two-wheel innovation drive on carbon emissions in China. The findings indicate that the two-wheel innovation drive exerts a substantial inhibitory effect on carbon emissions, with evidence of single threshold effect. Specifically, there is a phenomenon of diminishing marginal benefits observed after reaching a certain level. Technological innovation, as well as institutional innovation, each demonstrate an negative effect on carbon emissions. Besides, regional heterogeneity in this inhibition effect is evident, with the most significant impact observed in the western region, followed by the central region, while the effect is relatively weaker in the eastern region. Additionally, this paper constructs an interaction term to examine the moderating effect, affirming that with economic development, the two-wheel innovation drive can more effectively achieve carbon emission reduction.