The impact of China's environmental regulations on carbon intensity

Achieving substantial carbon reduction remains a critical challenge for both industrialised and emerging economies. While environmental regulations are widely promoted as an effective policy instrument to reduce emissions, empirical evidence on their national-level impact remains mixed, and the mechanisms through which regulation operates are not fully understood. This research examines whether environmental regulation reduces carbon intensity in China and investigates the channels (e.g., energy intensity and technological innovation) through which this effect occurs. We first used regulatory frequency analysis for the themes of "Innovation", "Renewable Energy", and "CO₂ Intensity" between 1996 and 2025 to provide qualitative validation of regulatory evolution consistent with the hypothesised mechanisms. We then use a balanced panel of 11 major CO₂-emitting countries from 2010 to 2023, we apply a Difference-in-Differences with Multiple Time Periods (DID-MTP) approach, treating China as the intervention case and the remaining countries as comparison units. Carbon intensity is measured as CO₂ emissions relative to GDP, energy intensity is proxied by total energy consumption per unit of GDP, and technological innovation is captured by per-capita trademark registrations. The results indicate that environmental regulations are associated with statistically significant reductions in carbon intensity, with the effect strengthening over time. Further analyses suggest that the reductions are achieved through declining energy intensity and increased technological innovation. Robustness checks confirm the stability of these findings. This study offers new empirical evidence that environmental regulation can be effective drivers of low-carbon transition by promoting innovation and energy efficiency. Our findings highlight the importance of regulatory designs that combine environmental enforcement with incentives for innovation and improvements in energy efficiency.