How does green fiscal policy promote the synergy of pollution mitigation and carbon reduction? Evidence from China

Abstract

This study constructs a comprehensive analysis model, utilizing data from Chinese provinces from 2014 to 2021 as the sample to explore how green fiscal policy (GFP) influences the synergy of pollution mitigation and carbon reduction (SPMCR). We collect data on multiple pollutants and greenhouse gas emissions and utilize a composite system model to assess the SMPCR in various regions of China. The findings show that green fiscal policy has significantly contributed to fostering the SPMCR. Industrial upgrading, green innovation, and energy optimization are effective channels for green fiscal policy to achieve SPMCR. Green fiscal policy is more conducive to promoting SPMCR in China's eastern and central regions, demonstrating a gradient of “east > central > west”. Environmental regulation and green fiscal policy synergistically promote SPMCR, with the positive impact of green fiscal policy being more pronounced in regions with stringent environmental regulations. The green fiscal policy presents more positive nonlinear effects on SPMCR when the level of green finance and informatization is higher. After a series of rigorous robustness tests, the main findings are consistent and reliable. In addition, we provide policy recommendations for developing countries to promote pollution and carbon reduction, thus fostering sustainable development.