An expanded STIRPAT model analysis of China’s carbon neutrality pathways

Abstract Climate change has emerged as a critical and divisive global concern, intensified by international accords that mandate urgent responses. Consequently, nations worldwide are actively pursuing carbon-neutrality goals. Renewable energy adoption, green innovation, and environmental taxation are pivotal in driving decarbonization efforts, underscoring the need to evaluate their influence on carbon emissions. This study explores the roles of financial development, renewable energy, green innovation, and environmental taxation in shaping carbon emissions across 30 Chinese provinces from 2007 to 2021. The study found that renewable energy effect on emissions varies substantially. Significant reductions only appear at high adoption levels, whereas in developing provinces, renewables complement rather than replace coal, resulting in slightly increased short-term emissions. Urbanization shows a nuanced relationship; while contributing to higher emissions in the short run, dynamic estimates suggest that more urbanized provinces can reduce emissions through efficiency and planning. Financial development can initially raise emissions by scaling economic activity but is associated with lower emissions in dynamic models as mature financial systems channel capital toward cleaner technologies. Economic growth displays a negative long-run association with emissions. Human capital has short-run positive effects on emissions with offsetting longer-run effects. Green innovation transiently elevates emissions due to scale and rebound effects before verified reductions materialize. Environmental taxation shows limited short-run impact but significant long-run emission reducing effects. These insights emphasize region-specific policies that integrate sustainable finance, robust environmental regulations, grid modernization and storage to enable fossil-fuel substitution, and innovation driven strategies to achieve meaningful emission reductions.