As well known, global warming is increasingly affecting the survival and development of human beings (Dahlmann et al., 2019; Bai et al., 2019; Liu et al., 2021), and carbon dioxide is recognized as the main contributor that exacerbates the greenhouse effect (Gehrsitz, 2017; Dong et al., 2018; Le et al., 2020). For this reason, the Chinese government focuses on carbon emissions reduction, and during the 2009 Copenhagen Summit, China pledged to achieve a 40–45% reduction in the level of carbon dioxide emission per unit of GDP by 2020 compared with 2005. Since then, China’s carbon reduction targets have been pursued at a higher level, representing a long-term and sustained effort. In September 2020, at the 75th session of the United Nations General Assembly, China promised to reach “carbon peak and neutrality goals” by 2030 and 2060 respectively. Against this background, the Chinese government has actively implemented different kinds of policies aiming to reduce carbon dioxide emissions (Liao et al., 2021), such as building low-carbon cities, establishing and developing a carbon emissions trading market, incorporating environmental improvement into the performance assessment of officials, and so on. Whether such government-led policies can promote carbon emission reduction is a matter of great concern to policy makers and scholars.
The established literature has explored many factors influencing carbon dioxide emissions from several perspectives, including international trade (Rhee and Chung, 2006; Ang, 2009; Saud et al., 2018), government decentralization (Middlemiss and Parrish, 2010), economic agglomeration (Yu et al., 2020), urbanization (Poumanyvong and Kaneko, 2010; Martínez-Zarzoso and Maruotti, 2011; Cai et al., 2021), and economic growth (Alshehry and Belloumi, 2015; Cohen et al., 2018; Li and Wang, 2019). Additionally, efforts to find an efficient and rational path to carbon emission reduction through scientific and technological innovation has received increasing attention (Li et al., 2017). Meanwhile, environment-related policies have a significant effect in bringing about carbon emission reductions (Friedl and Getzner, 2003), and governments are playing an increasingly important role (Baboukardos, 2017). For example, the low-carbon city pilot policy is an important measure to achieve low-carbon transformational development. Existing empirical studies have found that the construction of low-carbon cities is generally beneficial to reducing carbon dioxide emissions (Wolff et al., 2014; Gehrsitz, 2017; Pei et al., 2019; Wang and Wei, 2020; Yu and Zhang, 2021). In addition, carbon emission trading schemes are not only a market instrument to reduce and control carbon dioxide emissions using market mechanisms, but are also an institutional innovation and policy tool to implement the national carbon peak target and carbon-neutral vision (Hoffmann, 2007; Anger, 2010; Calel and Dechezleprêtre, 2016; Nguyen et al., 2019; Zhou et al., 2019; Dong et al., 2019; Zhang and Zhang, 2020).
In recent years, China has actively carried out pilot work in creating NIDZs, aiming to further implement an innovation-driven development strategy, improve the institutional mechanism of science and technology innovation (Gao et al., 2015). As a frontier of technology innovation cooperation and a comprehensive carrier to promote regional innovation development, NIDZs improve the innovation capability of enterprises in the region and promote technological progress and industrial structure upgrading through policy incentives, resource inclination, and strategic leadership (Huang et al., 2013). Furthermore, NIDZs can spur the rapid development of cities, thus serving as an important mechanism to accelerate innovation development in the new era (Wang and Ma, 2019).
Ample studies have been conducted in policy development process, regional differences, and strategic positioning of NIDZs at the theoretical level. They have explored various aspects of how to keep pace with time and continuously improve NIDZ development while summarizing the achievements already made. These researches are particularly rich in macroscopic frameworks including operation mechanism, system supply, and functional positioning, such as the studies made by Huang et al. (2013) and Gao et al. (2015). However, few studies have analysed the policy effects of the pilot NIDZ creation at the practical level. Existing research is limited to studies of its impact on the innovation level (Wang and Ma, 2019) and does not broaden the scope of its usefulness. The gaps in the literature provide the scope for this study.
The main goals of establishing NIDZs are “strengthening environmental protection”, “developing new energy industries and high-tech industries”, “establishing energy-saving and environmental protection industry clusters”, and “building a ‘green, low-carbon and recyclable’ ecological system”. It can be seen that low-carbon innovation and pollution reduction are the central principles and objectives of NIDZ construction, so we take them as the starting point to investigate whether the construction of NIDZs has significantly reduced carbon emissions in the host city. If so, through which mechanisms does this effect occur? Is there heterogeneity in carbon reduction effects depending on city characteristics? The answers to these questions are not only important for consolidating the previous achievements of the NIDZs and broadening their development space in the future, but also for providing useful policy insights for China to achieve its “carbon peak and neutrality goals”.
China provides a nice context for studying these issues. Firstly, China has become the world’s largest carbon dioxide emitter since 2006 (Zheng and Kahn, 2017; Cheng et al., 2019), and the contradiction between economic development and environmental protection has become increasingly acute (Chen et al., 2021). Against this background, the proposed target of carbon emission reduction presents both a challenge and an opportunity for China to reshape and upgrade its economy. Accordingly, establishing reasonable and effective carbon emission reduction policies is particularly crucial. Secondly, China clearly emphasizes the need to implement a coordinated regional development strategy. As a typical location-oriented policy, the significance of the construction of NIDZs has gone beyond the specific NIDZ sites themselves, so it is necessary to explore the policy effects in depth. In addition, because the pilot areas are designated by the central government, they have the property of “top-down” development, thus providing a valuable and convincing quasi-natural experimental sample for policy evaluation (Hu et al., 2020).
This paper contributes to the literature in the following three aspects. First, in terms of research perspective, based on the policy experiment of NIDZ construction, this study systematically investigates the carbon reduction effect of innovation-driven development. This paper is one of the early research paper to explore the impact of the pilot policy of NIDZ creation on carbon dioxide emissions in Chinese cities. Because low-carbon-oriented economy is an important principle of NIDZ construction, the assessment of the effect of this policy is indispensable. Secondly, in terms of practical implications, this paper finds the impact mechanism of NIDZ construction on carbon emission reduction from the perspective of technological progress and industrial upgrading, which enriches the existing literature. Lastly, in terms of empirical methods, this paper is based on the time-varying DID model, using the quasi-natural experiment of the NIDZ construction to effectively mitigate the endogeneity problem.
The rest of the paper is organized as follows: Section 2 describes the policy background and theoretical analysis, Section 3 discusses the research design, Section 4 presents the empirical results including benchmark regression analysis and robustness tests, Sections 5 and 6 provide the mechanism and heterogeneity analysis, and Section 7 concludes the article with policy implications.