Carbon Emission Reduction Effects of the Digital Economy: Mechanisms and Evidence from 282 Cities in China

The digital economy has great potential to boost innovation and social productivity, and it plays an important role in helping to achieve carbon peak and carbon neutrality. This study focuses on analyzing and testing the role of the digital economy in promoting carbon reduction in Chinese cities. Based on panel data of 282 cities in China from 2011 to 2019, this study measured the development level of the digital economy and carbon emission intensity by constructing a digital economy development level evaluation index system and a carbon emission inversion model, respectively. It was found that the digital economy can significantly reduce urban carbon emissions by promoting industrial structure upgrading and green innovation, and the digital economy will have a more obvious promotion effect on urban carbon emission reduction over time. This conclusion was found to be valid after we performed robustness tests such as the instrumental variable method, quasi-experimental analysis, and placebo test. Furthermore, heterogeneity analysis showed that eastern, regenerative, and provincial capital cities are better able to promote carbon emission reduction under the development of the digital economy. This study provides new empirical evidence at the city level for developing the digital economy to reduce urban carbon emissions and acts as a useful reference for developing countries to realize "smart carbon emission reduction".