Neighbor impacts of environmental regulation: The case of low-carbon pilot program in China

Environmental regulation is the key to pollution and carbon emission control. This study investigates the impact of environmental regulation based on the Low-Carbon Pilot Program (LCPP) implemented at a Chinese prefecture-level city or a municipality directly under the central government on its carbon intensity and that of its adjoining prefecture-level administrate unit by using the difference-in-differences method. The results show that implementing the LCPP will help to reduce the local city's carbon intensity, but the overall influence on the adjoining city is not significant. There are different effects on adjoining cities with different populations: implementing the LCPP reduces the carbon intensity of large adjoining cities, increases that of small adjoining cities, and has an insignificant effect on that of medium-sized adjoining cities. Based on additional channel analysis, implementing the LCPP has a significant technological spatial spillover effect on small adjoining cities and a spatial transfer impact of carbon-intensive industries on small and medium-sized adjoining cities. In conclusion, applying the LCPP helps to achieve a low-carbon city, but it has a spatial transfer effect of carbonintensive industries on small adjoining cities, leading to a significant increase in the carbon intensity of those cities.