Economic policy uncertainty (EPU) and firm carbon emissions: Evidence using a China provincial EPU index

Yu, J; Shi, X; Guo, D; Yang, L

Economic policy uncertainty (EPU) and firm carbon emissions: Evidence using a China provincial EPU index

Yu, J Shi, X

Guo, D Yang, L

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Publisher:: Elsevier BV
Publication Type:: Journal Article
Citation:: Energy Economics, 2021, 94, pp. 105071-105071
Issue Date:: 2021-02-01

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Field	Value	Language
dc.contributor.author	Yu, J
dc.contributor.author	Shi, X https://orcid.org/0000-0001-9653-7395
dc.contributor.author	Guo, D
dc.contributor.author	Yang, L
dc.date.accessioned	2021-03-02T06:40:01Z
dc.date.available	2021-03-02T06:40:01Z
dc.date.issued	2021-02-01
dc.identifier.citation	Energy Economics, 2021, 94, pp. 105071-105071
dc.identifier.issn	0140-9883
dc.identifier.uri	http://hdl.handle.net/10453/146640
dc.description.abstract	© 2020 Elsevier B.V. Although there have been numerous studies on economic policy uncertainty (EPU), its impact on firms' emissions has not often been examined. Using an unbalanced panel data of firms and a newly constructed provincial EPU index in China, this paper estimates the impact of EPU on manufacturing firms' carbon emission intensity. We further test the likely channels through which EPU can affect firm emission intensity, including the innovation channel, share of fossil fuels in the total energy consumption channel, and energy intensity channel. The findings show that China's provincial EPU imposes a significantly positive impact on firms' carbon emission intensity. The channel analysis shows that EPU influences carbon emission intensity through the share of fossil fuels in the total energy consumption and energy intensity in the short run, but not firm innovation. The results indicate that manufacturing firms prefer to use cheap and dirty fossil fuels to respond to the rising EPU. This paper suggests that policymakers should pay careful attention to the increasing effect of EPU on carbon emission intensity which could undermine China's emission reduction efforts and other sustainable development goals.
dc.language	en
dc.publisher	Elsevier BV
dc.relation.ispartof	Energy Economics
dc.relation.isbasedon	10.1016/j.eneco.2020.105071
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject	0906 Electrical and Electronic Engineering, 0913 Mechanical Engineering, 1402 Applied Economics
dc.subject.classification	Energy
dc.title	Economic policy uncertainty (EPU) and firm carbon emissions: Evidence using a China provincial EPU index
dc.type	Journal Article
utslib.citation.volume	94
utslib.for	0906 Electrical and Electronic Engineering
utslib.for	0913 Mechanical Engineering
utslib.for	1402 Applied Economics
pubs.organisational-group	/University of Technology Sydney/DVC (International)
pubs.organisational-group	/University of Technology Sydney/DVC (International)/Australia-China Relations Institute
pubs.organisational-group	/University of Technology Sydney
utslib.copyright.status	open_access	*
utslib.copyright.embargo	2023-02-01T00:00:00+1000Z
dc.date.updated	2021-03-02T06:40:00Z
pubs.publication-status	Published
pubs.volume	94

Abstract:

© 2020 Elsevier B.V. Although there have been numerous studies on economic policy uncertainty (EPU), its impact on firms' emissions has not often been examined. Using an unbalanced panel data of firms and a newly constructed provincial EPU index in China, this paper estimates the impact of EPU on manufacturing firms' carbon emission intensity. We further test the likely channels through which EPU can affect firm emission intensity, including the innovation channel, share of fossil fuels in the total energy consumption channel, and energy intensity channel. The findings show that China's provincial EPU imposes a significantly positive impact on firms' carbon emission intensity. The channel analysis shows that EPU influences carbon emission intensity through the share of fossil fuels in the total energy consumption and energy intensity in the short run, but not firm innovation. The results indicate that manufacturing firms prefer to use cheap and dirty fossil fuels to respond to the rising EPU. This paper suggests that policymakers should pay careful attention to the increasing effect of EPU on carbon emission intensity which could undermine China's emission reduction efforts and other sustainable development goals.

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http://hdl.handle.net/10453/146640