Green Fiscal Incentives and Corporate Carbon Intensity: Firm- Level Evidence from China

Green Fiscal Incentives and Corporate Carbon Intensity: Firm- Level Evidence from China | 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 Green Fiscal Incentives and Corporate Carbon Intensity: Firm- Level Evidence from China Lin Xiang, Shitong Xu, Yucai Xiao, Yixun Zhou, Qianbin Feng This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9544336/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 Advancing corporate decarbonization without compromising market competitiveness is a central challenge in global climate governance. While price-based instruments are widely studied, the micro-level effects of integrated green fiscal incentives remain underexplored. Exploiting China’s Comprehensive Demonstration Cities for Fiscal Policies on Energy Conservation and Emission Reduction (DCER) program as a quasi-natural experiment, this paper employs a staggered difference-in-differences design on firm-level tax survey data (2010–2016) to examine the impact of green fiscal incentives on corporate carbon intensity. We find that while these incentives significantly reduce firms’ direct carbon intensity, they inadvertently increase indirect carbon intensity. We conceptualize this phenomenon as an emission-boundary reallocation. Fiscal support alleviates the fixed costs of equipment renewal, driving on-site abatement through production electrification. However, constrained by a carbon-intensive power grid, the carbon burden is merely shifted to the purchased-electricity boundary rather than eliminated, a finding corroborated by the lack of macro-level urban emission reductions. Our findings highlight the necessity of boundary-sensitive carbon accounting and the coordination of firm-level decarbonization with power-system transitions. JEL codes: H23; Q52; Q58; L25; O38 Green fiscal incentives corporate carbon intensity direct emissions indirect emissions emission boundary place-based policy 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. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9544336","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":631012457,"identity":"43059f1d-69e9-4f89-90be-480af79285c8","order_by":0,"name":"Lin Xiang","email":"","orcid":"","institution":"Southwest Minzu University","correspondingAuthor":false,"prefix":"","firstName":"Lin","middleName":"","lastName":"Xiang","suffix":""},{"id":631012460,"identity":"502b03b8-4b80-47f3-8db9-71e4a355759f","order_by":1,"name":"Shitong Xu","email":"","orcid":"","institution":"Southwest Minzu University","correspondingAuthor":false,"prefix":"","firstName":"Shitong","middleName":"","lastName":"Xu","suffix":""},{"id":631012469,"identity":"17acb9ae-0358-4145-92be-a02abd00757e","order_by":2,"name":"Yucai Xiao","email":"","orcid":"","institution":"Southwest Minzu University","correspondingAuthor":false,"prefix":"","firstName":"Yucai","middleName":"","lastName":"Xiao","suffix":""},{"id":631012473,"identity":"4ab6ebec-c80d-4f86-93a9-c012eec1f169","order_by":3,"name":"Yixun Zhou","email":"","orcid":"","institution":"Kean University","correspondingAuthor":false,"prefix":"","firstName":"Yixun","middleName":"","lastName":"Zhou","suffix":""},{"id":631012482,"identity":"51fce36b-4fbb-422d-b426-f1f22d2a7e4f","order_by":4,"name":"Qianbin Feng","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA90lEQVRIiWNgGAWjYBAC9gYQaQBEzAyMDypAHGbmBrxaeA4gtDAbnAFrYSRGC0QXmwRYCwMhLey9h1+8KbDLM2fnPVZxoOJwNH87UMuPim24tfCcS7OcY5BcbNnMl3bjwJm03BmHGRsYe87cxqnFXiLHzJjHgDlxw2Ees9sf22xyG4BamBnbcGvhkX8D0lIP1lJwsE0idz5BLRI8xo95DA6DtTAcBNqygaAWnhwzxjkGxxN3NvMYS4D8shGo5SA+v/CwnzH+8OZPdeJ2/jOGH4Ahljvv/OGDD35U4NbCAIoOHnShA/jUAwHzBwwto2AUjIJRMAqQAQDqnFl+dUUUtAAAAABJRU5ErkJggg==","orcid":"","institution":"Southwest Minzu University","correspondingAuthor":true,"prefix":"","firstName":"Qianbin","middleName":"","lastName":"Feng","suffix":""}],"badges":[],"createdAt":"2026-04-27 16:23:39","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9544336/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9544336/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":109297697,"identity":"adf5471f-8aa7-4130-abbd-f69cdf868e5c","added_by":"auto","created_at":"2026-05-15 09:02:24","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1295922,"visible":true,"origin":"","legend":"","description":"","filename":"20260426manuscriptwithAuthornames.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9544336/v1_covered_0852914e-0a93-476a-b589-d8de2a8f5ceb.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Green Fiscal Incentives and Corporate Carbon Intensity: Firm- Level Evidence from China","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Green fiscal incentives, corporate carbon intensity, direct emissions, indirect emissions, emission boundary, place-based policy","lastPublishedDoi":"10.21203/rs.3.rs-9544336/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-9544336/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eAdvancing corporate decarbonization without compromising market competitiveness is a central challenge in global climate governance. 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