The emission-reduction effects of green innovation in china’s heavily polluting industries under cost pressures

Green innovation is crucial for China, the "world's factory", to reduce the environmental impact of the high energy consumption and high emissions of heavily polluting industries. However, existing studies rarely investigate the emission-reduction effects of green innovation in heavily polluting industries in China. This study applies a dynamic panel model to explore how green innovation reduces pollutant emissions in these industries. Additionally, it examines the significant role of cost pressures in this process. The findings reveal three key insights: (1) Green innovation significantly reduces pollutant emission intensity in heavily polluting industries. However, cost pressures weaken the emission-reduction effects of green innovation. In contrast, efficiency-empowered advantages strengthen these effects. (2) Heterogeneity analysis reveals that the inhibitory effect of cost pressures primarily impacts small-scale and low-profit enterprises. This result highlights that the sensitivity of enterprises to costs is a key factor in reducing the effectiveness of green innovation. (3) Regional analysis indicates that cost pressures do not significantly affect the emission-reduction effects of green innovation in eastern and western enterprises. However, these pressures have a more pronounced inhibitory effect on central enterprises. This result could be due to increased competition for eligibility to receive industrial transfers from eastern coastal regions, which heightens the cost sensitivity of central enterprises. To address these challenges, this paper recommends improving the "cost-regulation matching mechanism" to resolve the paradox between green innovation and economic benefits, often referred to as the "weak Porter hypothesis".