The moderating effect of innovation on the relationship between urbanization and CO2 emissions: Evidence from three major urban agglomerations in China

Abstract

This study investigates the relationship between urbanization, innovation, and CO2 emissions, with particular attention paid to the issue of how innovation influences the effect of urbanization on CO2 emissions in urban agglomerations, considering the spatial spillover effect between cities. Therefore, based on panel data on 48 cities in the three major urban agglomerations in China from 2001-2015, a spatial econometric model is used to estimate the effect of urbanization and innovation on CO2 emissions. The empirical results indicate that the relationship between urbanization and CO2 emissions follows a U-shaped curve in the Beijing-Tianjin-Hebei (BTH), an N-shaped curve in the Yangtze River Delta (YRD) and an inverted N-shaped pattern in the Pearl River Delta (PRD). Additionally, innovation shows a significantly positive effect on reducing CO2 emissions in the YRD, but does not exert a significantly direct effect on CO2 emissions in the BTH and the PRD. More importantly, innovation played an important moderating role between urbanization and CO2 emissions in the YRD and PRD, suggesting that reducing the positive impacts of urbanization on CO2 emissions depends on innovative development. In addition, urban CO2 emissions presented a clearly negative spatial spillover effect among the cities in the three urban agglomerations. These findings and the following policy implications will contribute to reducing CO2 emissions.