Abstract
To accomplish China’s sustainable growth, it is critical to identify the primary factors affecting environmental quality in the steel industry. In this positioning, foreign direct investment (FDI), energy intensity, and technological innovation have emerged as strong pillars of the steel industry. However, there are growing concerns of carbon emission from this industry which is still debatable. In this context, this study measures the effect of FDI, energy intensity, and technology innovation on environmental quality in the steel industry from 28 provinces of China. The study uses the provincial data for China over the period 2000–2018. In addition to examining unit root properties and cointegration, this study employed Augmented Mean Group regression for estimating long-run relationships among study variables. The findings reveal the negative effect of FDI and technology innovation on environmental quality. These findings indicate that FDI and technology innovation have shaped the energy intensity in the steel industry. The positive coefficient value of energy intensity shows that innovations for environmental conservation and energy usage are minimal and did not perform an integral part in lowering carbon emissions. These findings are important in formulating successful emission reduction policies after controlling the effects of urbanization and economic growth for the Chinese steel sector.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.
Notes
Energy Development Strategic Action Plan 2014–2020 http://www.nea.gov.cn/2014-12/03/c_133830458.htm
The State Council issued the “Outline of National Innovation Driven Development Strategy” http://www.gov.cn/xinwen/2016-05/19/content_5074812.htm
References
Ahmad M, Jiang P, Majeed A et al (2020a) The dynamic impact of natural resources, technological innovations and economic growth on ecological footprint: an advanced panel data estimation. Res Policy 69:101817. https://doi.org/10.1016/j.resourpol.2020.101817
Ahmad M, Jiang P, Majeed A, Raza MY (2020b) Does financial development and foreign direct investment improve environmental quality? Evidence from belt and road countries. Environ Sci Pollut Res 27:23586–23601. https://doi.org/10.1007/s11356-020-08748-7
Ahmad M, Ahmed Z, Majeed A, Huang B (2021) An environmental impact assessment of economic complexity and energy consumption: does institutional quality make a difference? Environ Impact Assess Rev 89:106603. https://doi.org/10.1016/j.eiar.2021.106603
Al-mulali U, Fereidouni HG, Lee JYM, Sab CNBC (2013) Exploring the relationship between urbanization, energy consumption, and CO2 emission in MENA countries. Renew Sust Energ Rev 23:107–112. https://doi.org/10.1016/j.rser.2013.02.041
Andreoni J, Levinson A (2001) The simple analytics of the environmental Kuznets curve. J Public Econ 80:269–286. https://doi.org/10.1016/S0047-2727(00)00110-9
Ang JB (2009) CO2 emissions, research and technology transfer in China. Ecol Econ 68:2658–2665. https://doi.org/10.1016/j.ecolecon.2009.05.002
Baek J (2016) A new look at the FDI–income–energy–environment nexus: dynamic panel data analysis of ASEAN. Energy Policy 91:22–27. https://doi.org/10.1016/j.enpol.2015.12.045
Bakhsh K, Rose S, Ali MF et al (2017) Economic growth, CO2 emissions, renewable waste and FDI relation in Pakistan: new evidences from 3SLS. J Environ Manag 196:627–632. https://doi.org/10.1016/j.jenvman.2017.03.029
Breusch TS, Pagan AR (1980) The lagrange multiplier test and its applications to model specification in econometrics. Rev Econ Stud 47:239. https://doi.org/10.2307/2297111
Cheng C, Ren X, Wang Z, Yan C (2019) Heterogeneous impacts of renewable energy and environmental patents on CO 2 emission - evidence from the BRIICS. Sci Total Environ 668:1328–1338. https://doi.org/10.1016/j.scitotenv.2019.02.063
Cheong TS, Li VJ, Shi X (2019) Regional disparity and convergence of electricity consumption in China: a distribution dynamics approach. China Econ Rev 58:101154. https://doi.org/10.1016/j.chieco.2018.02.003
De Hoyos RE, Sarafidis V (2006) Testing for cross-sectional dependence in panel-data models. Stata J 6:482–496. https://doi.org/10.1177/1536867x0600600403
Dogan E, Seker F (2016) An investigation on the determinants of carbon emissions for OECD countries: empirical evidence from panel models robust to heterogeneity and cross-sectional dependence. Environ Sci Pollut Res 23:14646–14655. https://doi.org/10.1007/s11356-016-6632-2
Doytch N, Uctum M (2016) Globalization and the environmental impact of sectoral FDI. Econ Syst 40:582–594. https://doi.org/10.1016/j.ecosys.2016.02.005
Du L, Wei C, Cai S (2012) Economic development and carbon dioxide emissions in China: provincial panel data analysis. China Econ Rev 23:371–384. https://doi.org/10.1016/j.chieco.2012.02.004
Eberhardt M (2012) Estimating panel time-series models with heterogeneous slopes. Stata J Promot Commun Stat Stata 12:61–71. https://doi.org/10.1177/1536867X1201200105
Fernández Fernández Y, Fernández López MA, Olmedillas Blanco B (2018) Innovation for sustainability: the impact of R& D spending on CO2 emissions. J Clean Prod 172:3459–3467. https://doi.org/10.1016/j.jclepro.2017.11.001
Filipescu DA, Prashantham S, Rialp A, Rialp J (2013) Technological innovation and exports: unpacking their reciprocal causality. J Int Mark 21:23–38. https://doi.org/10.1509/jim.12.0099
Fisher-Vanden K, Jefferson GH, Liu H, Tao Q (2004) What is driving China’s decline in energy intensity? Resour Energy Econ 26:77–97. https://doi.org/10.1016/j.reseneeco.2003.07.002
Garrone P, Grilli L (2010) Is there a relationship between public expenditures in energy R&D and carbon emissions per GDP? An empirical investigation. Energy Policy 38:5600–5613. https://doi.org/10.1016/j.enpol.2010.04.057
Global Innovation Index (2021) Global Innovation Index score. In: 2021. https://www.statista.com/statistics/1055637/mexico-global-innovation-index-score/. Accessed 14 Jul 2021
Han D, Fu Q, Gao S et al (2019) Investigate the impact of local iron–steel industrial emission on atmospheric mercury concentration in Yangtze River Delta, China. Environ Sci Pollut Res 26:5862–5872. https://doi.org/10.1007/s11356-018-3978-7
Hao Y, Liu YM (2015) Has the development of FDI and foreign trade contributed to China’s CO2 emissions? An empirical study with provincial panel data. Nat Hazards 76:1079–1091. https://doi.org/10.1007/s11069-014-1534-4
Hao Y, Wu Y, Wu H, Ren S (2020) How do FDI and technical innovation affect environmental quality? Evidence from China. Environ Sci Pollut Res 27:7835–7850. https://doi.org/10.1007/s11356-019-07411-0
Hille E, Shahbaz M, Moosa I (2019) The impact of FDI on regional air pollution in the Republic of Korea: a way ahead to achieve the green growth strategy? Energy Econ 81:308–326. https://doi.org/10.1016/j.eneco.2019.04.004
Inglesi-Lotz R (2017) Social rate of return to R&D on various energy technologies: Where should we invest more? A study of G7 countries. Energy Policy 101:521–525. https://doi.org/10.1016/j.enpol.2016.10.043
Jiang Y (2015) Foreign direct investment, pollution, and the environmental quality: a model with empirical evidence from the Chinese regions. Int Trade J 29:212–227. https://doi.org/10.1080/08853908.2014.1001538
Kahouli B (2018) The causality link between energy electricity consumption, CO2 emissions, R&D stocks and economic growth in Mediterranean countries (MCs). Energy 145:388–399. https://doi.org/10.1016/j.energy.2017.12.136
Kapetanios G, Pesaran MH, Yamagata T (2011) Panels with non-stationary multifactor error structures. J Econ 160:326–348. https://doi.org/10.1016/j.jeconom.2010.10.001
Kim Y, Worrell E (2002) International comparison of CO2 emission trends in the iron and steel industry. Energy Policy 30:827–838. https://doi.org/10.1016/S0301-4215(01)00130-6
Koçak E, Ulucak ZŞ (2019) The effect of energy R&D expenditures on CO2 emission reduction: estimation of the STIRPAT model for OECD countries. Environ Sci Pollut Res 26:14328–14338. https://doi.org/10.1007/s11356-019-04712-2
Lau LS, Choong CK, Eng YK (2014) Investigation of the environmental Kuznets curve for carbon emissions in Malaysia: DO foreign direct investment and trade matter? Energy Policy 68:490–497. https://doi.org/10.1016/j.enpol.2014.01.002
Lee JW (2013) The contribution of foreign direct investment to clean energy use, carbon emissions and economic growth. Energy Policy 55:483–489. https://doi.org/10.1016/j.enpol.2012.12.039
Lee KH, Min B (2015) Green R&D for eco-innovation and its impact on carbon emissions and firm performance. J Clean Prod 108:534–542. https://doi.org/10.1016/j.jclepro.2015.05.114
Lee K-H, Min B, Yook K-H (2015) The impacts of carbon (CO2) emissions and environmental research and development (R&D) investment on firm performance. Int J Prod Econ 167:1–11. https://doi.org/10.1016/j.ijpe.2015.05.018
Li K, Lin B (2016) Impact of energy technology patents in China: evidence from a panel cointegration and error correction model. Energy Policy 89:214–223. https://doi.org/10.1016/j.enpol.2015.11.034
Lin B, Du K (2013) Technology gap and China’s regional energy efficiency: a parametric metafrontier approach. Energy Econ 40:529–536. https://doi.org/10.1016/j.eneco.2013.08.013
Lin B, Xu B (2017) Which provinces should pay more attention to CO2 emissions? Using the quantile regression to investigate China’s manufacturing industry. J Clean Prod 164:980–993. https://doi.org/10.1016/j.jclepro.2017.07.022
Lin B, Zhu J (2019) Determinants of renewable energy technological innovation in China under CO2 emissions constraint. J Environ Manag 247:662–671. https://doi.org/10.1016/j.jenvman.2019.06.121
Liu Z, Mao X, Tu J, Jaccard M (2014) A comparative assessment of economic-incentive and command-and-control instruments for air pollution and CO2 control in China’s iron and steel sector. J Environ Manag 144:135–142. https://doi.org/10.1016/j.jenvman.2014.05.031
Liu Y, Hao Y, Gao Y (2017) The environmental consequences of domestic and foreign investment: evidence from China. Energy Policy 108:271–280. https://doi.org/10.1016/j.enpol.2017.05.055
Long Y, Pan J, Farooq S, Boer H (2016) A sustainability assessment system for Chinese iron and steel firms. J Clean Prod 125:133–144. https://doi.org/10.1016/j.jclepro.2016.03.030
Majeed A, Jiang P, Ahmad M et al (2021a) The Impact of Foreign Direct Investment on Financial Development: New Evidence from Panel Cointegration and Causality Analysis. J Compet 13:95–112. https://doi.org/10.7441/joc.2021.01.06
Majeed A, Wang L, Zhang X et al (2021b) Modeling the dynamic links among natural resources, economic globalization, disaggregated energy consumption, and environmental quality: fresh evidence from GCC economies. Res Policy 73:102204. https://doi.org/10.1016/j.resourpol.2021.102204
Martínez-Zarzoso I, Maruotti A (2011) The impact of urbanization on CO2 emissions: evidence from developing countries. Ecol Econ 70:1344–1353. https://doi.org/10.1016/j.ecolecon.2011.02.009
Mi Z, Zhang Y, Guan D et al (2016) Consumption-based emission accounting for Chinese cities. Appl Energy 184:1073–1081. https://doi.org/10.1016/j.apenergy.2016.06.094
Ndikumana L, Verick S (2008) The linkages between FDI and domestic investment: unravelling the developmental impact of foreign investment in sub-Saharan Africa. Dev Policy Rev 26:713–726. https://doi.org/10.1111/j.1467-7679.2008.00430.x
NRDC (2015) National Development and Reform Commission: enhanced actions on cli mate change: China’s intended nationally determined contributions. In: Natl. Dev. Reform Comm. www.sdpc.gov.cn/xwzx/xwfb/201506/%0At20150630_710204.html. Accessed 1 Aug 2021
Pesaran MH (2004) General diagnostic tests for cross section dependence in panels. SSRN Electron J 1229. https://ssrn.com/abstract=572504
Pesaran MH (2006) Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica 74:967–1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x
Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econ 22:265–312. https://doi.org/10.1002/jae.951
Pesaran MH, Yamagata T (2008) Testing slope homogeneity in large panels. J Econ 142:50–93. https://doi.org/10.1016/j.jeconom.2007.05.010
Ponce P, Khan SAR (2021) A causal link between renewable energy, energy efficiency, property rights, and CO2 emissions in developed countries: a road map for environmental sustainability. Environ Sci Pollut Res 28:37804–37817. https://doi.org/10.1007/s11356-021-12465-0
Sadorsky P (2014) The effect of urbanization on CO2 emissions in emerging economies. Energy Econ 41:147–153. https://doi.org/10.1016/j.eneco.2013.11.007
Samargandi N (2017) Sector value addition, technology and CO 2 emissions in Saudi Arabia ☆. Renew Sust Energ Rev 78:868–877. https://doi.org/10.1016/j.rser.2017.04.056
Sapkota P, Bastola U (2017) Foreign direct investment, income, and environmental pollution in developing countries: panel data analysis of Latin America. Energy Econ 64:206–212. https://doi.org/10.1016/j.eneco.2017.04.001
Sbia R, Shahbaz M, Hamdi H (2014) A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE. Econ Model 36:191–197. https://doi.org/10.1016/j.econmod.2013.09.047
Shan Y, Liu J, Liu Z et al (2016) New provincial CO2 emission inventories in China based on apparent energy consumption data and updated emission factors. Appl Energy 184:742–750. https://doi.org/10.1016/j.apenergy.2016.03.073
Shehzad K, Xiaoxing L, Ahmad M et al (2021) Corrigendum to “Does air pollution upsurge in megacities after Covid-19 lockdown? A spatial approach” [J. Environ. Res. 197 (2021) 111052]. Environ Res 201:111562. https://doi.org/10.1016/J.ENVRES.2021.111562
Sun C, Zhang F, Xu M (2017) Investigation of pollution haven hypothesis for China: an ARDL approach with breakpoint unit root tests. J Clean Prod 161:153–164. https://doi.org/10.1016/j.jclepro.2017.05.119
Sung B, Song WY, Do PS (2018) How foreign direct investment affects CO2 emission levels in the Chinese manufacturing industry: evidence from panel data. Econ Syst 42:320–331. https://doi.org/10.1016/j.ecosys.2017.06.002
Tang CF, Tan EC (2013) Exploring the nexus of electricity consumption, economic growth, energy prices and technology innovation in Malaysia. Appl Energy 104:297–305. https://doi.org/10.1016/j.apenergy.2012.10.061
Tang CF, Tan BW, Ozturk I (2016) Energy consumption and economic growth in Vietnam. Renew Sust Energ Rev 54:1506–1514. https://doi.org/10.1016/j.rser.2015.10.083
Tian Y, Zhu Q, Geng Y (2013) An analysis of energy-related greenhouse gas emissions in the Chinese iron and steel industry. Energy Policy 56:352–361. https://doi.org/10.1016/j.enpol.2012.12.068
Wang C, Zhang YJ (2020) Does environmental regulation policy help improve green production performance? Evidence from China’s industry. Corp Soc Responsib Environ Manag 27:937–951. https://doi.org/10.1002/csr.1857
Wang Q, Wu S, Zeng Y, Wu B (2016a) Exploring the relationship between urbanization, energy consumption, and CO2 emissions in different provinces of China. Renew Sust Energ Rev 54:1563–1579. https://doi.org/10.1016/j.rser.2015.10.090
Wang S, Li Q, Fang C, Zhou C (2016b) The relationship between economic growth, energy consumption, and CO2 emissions: empirical evidence from China. Sci Total Environ 542:360–371. https://doi.org/10.1016/j.scitotenv.2015.10.027
Wang Y, Li L, Kubota J et al (2016c) Does urbanization lead to more carbon emission? Evidence from a panel of BRICS countries. Appl Energy 168:375–380. https://doi.org/10.1016/j.apenergy.2016.01.105
Wang P, Li W, Kara S (2017) Cradle-to-cradle modeling of the future steel flow in China. Resour Conserv Recycl 117:45–57. https://doi.org/10.1016/j.resconrec.2015.07.009
Wang Z, Gao L, Wei Z et al (2021) How FDI and technology innovation mitigate CO2 emissions in high-tech industries: evidence from province-level data of China. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-021-15946-4
Wen F, Zhao L, He S, Yang G (2020) Asymmetric relationship between carbon emission trading market and stock market: evidences from China. Energy Econ 91:104850. https://doi.org/10.1016/j.eneco.2020.104850
Wenying C, Xiang Y, Ding M (2014) A bottom-up analysis of China’s iron and steel industrial energy consumption and CO2 emissions. Appl Energy 136:1174–1183. https://doi.org/10.1016/j.apenergy.2014.06.002
Westerlund J (2007) Testing for error correction in panel data. Oxf Bull Econ Stat 69:709–748. https://doi.org/10.1111/j.1468-0084.2007.00477.x
WSA (2018) Steel Statistical Yearbook 2018. WorldSteel Assoc 1:121
WSA (2019) Steel’s contribution to a low carbon future and climate resilient societies. Worldsteel position paper
Xiaoman W, Majeed A, Vasbieva DG, et al (2021) Natural resources abundance, economic globalization , and carbon emissions: advancing sustainable development agenda. 1–12. https://doi.org/10.1002/sd.2192
Xu B, Lin B (2017) What cause a surge in China’s CO2 emissions? A dynamic vector autoregression analysis. J Clean Prod 143:17–26. https://doi.org/10.1016/j.jclepro.2016.12.159
Xu B, Lin B (2018) Investigating the role of high-tech industry in reducing China’s CO2 emissions: A regional perspective. J Clean Prod 177:169–177. https://doi.org/10.1016/j.jclepro.2017.12.174
Yearbook CS (2021) China Statistical Yearbook. In: http://www.stats.gov.cn/. http://www.stats.gov.cn/. Accessed 13 Jul 2021
Yu Y, Du Y (2019) Impact of technological innovation on CO2 emissions and emissions trend prediction on ‘New Normal’ economy in China. Atmos Pollut Res 10:152–161. https://doi.org/10.1016/j.apr.2018.07.005
Zeng S, Lan Y, Huang J (2009) Mitigation paths for Chinese iron and steel industry to tackle global climate change. Int J Greenh Gas Control 3:675–682. https://doi.org/10.1016/j.ijggc.2009.06.001
Zhang C, Zhou X (2016) Does foreign direct investment lead to lower CO2 emissions? Evidence from a regional analysis in China. Renew Sust Energ Rev 58:943–951
Zhang S, Worrell E, Crijns-Graus W et al (2014) Co-benefits of energy efficiency improvement and air pollution abatement in the Chinese iron and steel industry. Energy 78:333–345. https://doi.org/10.1016/j.energy.2014.10.018
Zhang N, Yu K, Chen Z (2017a) How does urbanization affect carbon dioxide emissions? A cross-country panel data analysis. Energy Policy 107:678–687. https://doi.org/10.1016/j.enpol.2017.03.072
Zhang Y-J, Bian X-J, Tan W, Song J (2017b) The indirect energy consumption and CO2 emission caused by household consumption in China: an analysis based on the input–output method. J Clean Prod 163:69–83. https://doi.org/10.1016/j.jclepro.2015.08.044
Zhang X, Gao S, Fu Q et al (2020) Impact of VOCs emission from iron and steel industry on regional O3 and PM2.5 pollutions. Environ Sci Pollut Res 27:28853–28866. https://doi.org/10.1007/s11356-020-09218-w
Zheng W, Walsh PP (2019) Economic growth, urbanization and energy consumption — a provincial level analysis of China. Energy Econ 80:153–162. https://doi.org/10.1016/j.eneco.2019.01.004
Zhu L, Hao Y, Lu ZN et al (2019) Do economic activities cause air pollution? Evidence from China’s major cities. Sustain Cities Soc 49:101593. https://doi.org/10.1016/j.scs.2019.101593
Author information
Authors and Affiliations
Contributions
The authors contributed equally to this work.
Corresponding author
Ethics declarations
Ethics approval and consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interests
The authors declare no competing interests.
Additional information
Responsible Editor: Nicholas Apergis
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Appendix
Appendix
Rights and permissions
About this article
Cite this article
Wang, L. Role of FDI and energy intensity in mitigating the environmental pollution in the Chinese steel industry: does technological innovation makes a difference?. Environ Sci Pollut Res 29, 28127–28138 (2022). https://doi.org/10.1007/s11356-021-18219-2
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-021-18219-2