Regulation Without Transformation: Are China’s Low-Carbon Policies Effective for Carbon Abatement, and Can They Be Sustained?

We evaluated the effectiveness and long-term sustainability of China’s low-carbon policies using a comprehensive policy intensity index and satellite-based CO2 emissions. We found that both command-and-control and market-based measures have significantly reduced emissions across China but mainly via scale effects (i.e., contraction of industrial activity) rather than technique effects (i.e., more green invention patents granted and an increase in carbon total factor productivity) or composition effects (i.e., industrial upgrading and clean energy transition). Furthermore, command-and-control policies are associated with less green innovation, while market-based policies lead to limited gains in industrial restructuring and, unexpectedly, also show a negative association with clean energy adoption. Using a unique dataset of millions of business registration records and county-level CO2 emissions, we also uncovered substantial intra-national carbon leakage at the city level, with emissions relocating to provincial border areas where enforcement is weaker, thus exacerbating emission inequality among jurisdictions. Furthermore, our novel transfer learning projections indicate that current policies may lose their efficacy in nearly 47% of cities under foreseeable economic and structural changes, exposing the fragility of contraction-led carbon abatement. These results underscore the need to move beyond the short-term suppression of outputs toward a durable, innovation-driven pathway of decarbonization.