How environmental policy stringency affects total factor carbon productivity through renewable energy and environmental technology

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Abstract In the face of escalating environmental challenges and the global push for sustainable development, understanding the impact of environmental policies on economic performance is increasingly vital. This study investigates the relationship between environmental policy stringency (EPS) and total factor carbon productivity (TFCP), emphasizing the roles of renewable energy consumption (REC) and environmental technology adoption (ETA). Using a comprehensive dataset from 40 countries over the period 1995 to 2019, we apply stochastic frontier analysis (SFA) to estimate TFCP and a fixed-effects model to evaluate the short-term and long-term impacts of EPS across different quantiles. Our findings indicate that while stringent environmental policies may initially suppress productivity due to compliance costs, they can ultimately enhance long-term productivity through innovation and efficiency improvements. However, overly stringent regulations may hinder TFCP due to rising compliance costs. The analysis further reveals that the influence of EPS on TFCP varies with the levels of REC and ETA. Specifically, REC demonstrates a rebound effect in the short term, where improved energy efficiency may paradoxically lead to higher overall energy consumption. Its long-term positive effects on TFCP become more significant as usage levels rise. In contrast, the impact of environmental technology remains ambiguous due to the complexities involved in evaluating these technologies and the intricate processes from innovation to implementation. This research contributes to a deeper understanding of how environmental policies can be tailored to support sustainable economic development across diverse contexts and technological maturity levels.
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How environmental policy stringency affects total factor carbon productivity through renewable energy and environmental technology | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article How environmental policy stringency affects total factor carbon productivity through renewable energy and environmental technology Jingyu Qu, Wooyoung Jeon This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7748857/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract In the face of escalating environmental challenges and the global push for sustainable development, understanding the impact of environmental policies on economic performance is increasingly vital. This study investigates the relationship between environmental policy stringency (EPS) and total factor carbon productivity (TFCP), emphasizing the roles of renewable energy consumption (REC) and environmental technology adoption (ETA). Using a comprehensive dataset from 40 countries over the period 1995 to 2019, we apply stochastic frontier analysis (SFA) to estimate TFCP and a fixed-effects model to evaluate the short-term and long-term impacts of EPS across different quantiles. Our findings indicate that while stringent environmental policies may initially suppress productivity due to compliance costs, they can ultimately enhance long-term productivity through innovation and efficiency improvements. However, overly stringent regulations may hinder TFCP due to rising compliance costs. The analysis further reveals that the influence of EPS on TFCP varies with the levels of REC and ETA. Specifically, REC demonstrates a rebound effect in the short term, where improved energy efficiency may paradoxically lead to higher overall energy consumption. Its long-term positive effects on TFCP become more significant as usage levels rise. In contrast, the impact of environmental technology remains ambiguous due to the complexities involved in evaluating these technologies and the intricate processes from innovation to implementation. This research contributes to a deeper understanding of how environmental policies can be tailored to support sustainable economic development across diverse contexts and technological maturity levels. EPS TFCP Renewable Energy Environmental Technology Rebound Effect Green Paradox Cumulative Effect Quantile Analysis Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. 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This study investigates the relationship between environmental policy stringency (EPS) and total factor carbon productivity (TFCP), emphasizing the roles of renewable energy consumption (REC) and environmental technology adoption (ETA). Using a comprehensive dataset from 40 countries over the period 1995 to 2019, we apply stochastic frontier analysis (SFA) to estimate TFCP and a fixed-effects model to evaluate the short-term and long-term impacts of EPS across different quantiles. Our findings indicate that while stringent environmental policies may initially suppress productivity due to compliance costs, they can ultimately enhance long-term productivity through innovation and efficiency improvements. However, overly stringent regulations may hinder TFCP due to rising compliance costs. The analysis further reveals that the influence of EPS on TFCP varies with the levels of REC and ETA. 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