Exploring the spatial spillover effects of climate mitigation policies on the upgrading of industrial structure: Evidence from 31 provinces of China

In the context of the formidable challenge posed by global climate change, achieving high-quality and sustainable economic development has become a topic of widespread concern. Since the signing of the Kyoto Protocol, nations worldwide have actively engaged in the fight against climate change. As the largest emitter of greenhouse gases globally, China has introduced a series of low-carbon policies to attain its sustainability goals. Based on the panel data of 31 provinces in China from 2005 to 2019, this paper investigates the spatial spillover effects of the carbon Emission Trading Scheme (ETS) on the industrial structure upgrading and its transmission mechanisms by constructing spatial econometric models and a multiple mediation effect model. The results indicate that ETS exerts a promotional effect on industrial structure upgrading within policy pilot regions. However, in the peripheral areas outside the pilot regions, there exists a negative spillover effect, and the inhibitory effect is stronger than the promotional effect. Moreover, consumer upgrading and technological innovation emerge as two major pathways through which ETS stimulates the upgrading of industrial structures. Results from two sets of heterogeneity tests reveal that the impact of low-carbon policies on industrial structure upgrading is most pronounced in the eastern regions and areas characterized by high pollution.