Environmental Protection Tax in China Reduces Carbon Emissions by 5.63%

New research on the effectiveness of China's Environmental Protection Tax in reducing regional carbon emissions has revealed a significant reduction of 5.63% in carbon emissions. The study, conducted by researchers at Wuhan Business University, analyzed panel data from 287 Chinese cities over the period from 2009 to 2021. The findings demonstrate that the Environmental Protection Tax has led to a substantial reduction in carbon emissions through increased investment in green research and development, improved energy efficiency, and industrial upgrading.

Key Takeaways:

• The Environmental Protection Tax has led to a significant reduction of 5.63% in carbon emissions in China.
• Mechanism analysis reveals that the reduction is primarily driven by increased investment in green research and development, improved energy efficiency, and industrial upgrading.
• Further heterogeneity analysis shows that the policy is more effective in eastern regions, non-old traditional industrial areas, strong government concern areas, and energy-intensive areas.
• In addition to reducing carbon emissions, the Environmental Protection Tax has also lowered other air pollutants, improved air quality, and enhanced residents' subjective well-being.
• The research provides robust empirical support for the optimization of environmental tax policies to further strengthen China's transition to a low-carbon economy and advance its sustainable development objectives.
• The study's findings have important implications for policymakers in China and around the world seeking to reduce carbon emissions and mitigate the effects of climate change.
• Researchers Jian Luo, Jiqiang Huang, and Yan Zhang contributed to the study, which was published in the journal Scientific Reports.

Statistics:

• Reduction in carbon emissions: 5.63%
• Period of analysis: 2009-2021
• Number of Chinese cities analyzed: 287
• Regions where the policy is more effective: eastern regions, non-old traditional industrial areas, strong government concern areas, and energy-intensive areas
• Percentage change in other air pollutants: not specified
• Year of publication: 2025
• Journal: Scientific Reports
• Volume: 15, Issue: 1, Article number: 23710

Sources:

• The actual effect and mechanism of environmental protection taxes on carbon emission reduction: evidence from China, Scientific Reports, 2025;15(1):23710.
• Wuhan Business University, School of Accounting, Wuhan, 430056, Hubei, People's Republic of China.
• Nature Portfolio, Heidelberger Platz 3, Berlin, 14197, Germany.