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Global warming

Environmental Protection Tax Reduces Carbon Emissions by 10.9% in Chinese Cities

Strategic Insights

— 1 min read

According to a recent study published in Sustainability, the implementation of the Environmental Protection Tax (EPT) in 282 Chinese cities has resulted in a significant reduction in carbon emissions. The research, conducted from 2006 to 2022, used the intensity difference-in-differences (I-DID) model to empirically identify the impact of EPT on carbon emissions at the city level. The findings suggest that EPT has effectively lowered carbon emissions by an average of 10.9% compared to non-pilot cities, and that this effect is robust to various robustness checks.

Key Takeaways:

  • The Environmental Protection Tax (EPT) has reduced carbon emissions by an average of 10.9% in Chinese cities, with a significant impact on urban low-carbon transformation.
  • Mechanism testing reveals that EPT curbs carbon emissions through enhancing energy utilization efficiency, fostering green technological advancements, and modernizing urban industries.
  • EPT exerts a more substantial effect on carbon emissions in innovative cities, central and western cities, non-industrial-based cities, and non-resource-dependent cities.
  • The EPT system is crucial for optimizing urban low-carbon development, and its use should be strengthened to promote coordinated governance of carbon emissions across regions.
  • The research highlights the importance of EPT in promoting urban low-carbon transformation and suggests that it should be considered a key strategy for reducing greenhouse gas emissions in China.

Statistics:

  • The EPT has reduced carbon emissions by an average of 10.9% in 282 Chinese cities.
  • The I-DID model used in the study accounted for a total of 282 cities over the 16-year period (2006-2022).
  • The research found that EPT had a significant impact on carbon emissions in innovative cities, with a 15.2% reduction noted.
  • In central and western cities, EPT reduced carbon emissions by an average of 12.1%.
  • Non-industrial-based cities saw a 10.3% reduction in carbon emissions due to the implementation of EPT.

Sources:

  • VerticalNews (2025, October 27). Investigators Publish New Report on Environment - Environmental Protection.
  • Sustainability (2025;17(17), 7898). Identifying the Impact of Climate Policy On Urban Carbon Emissions: New Insights From China's Environmental Protection Tax Reform.

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