Research on dual-carbon policy and enterprise financing costs in China’s power industry: Evidence from a multi-period DID model

China’s carbon peaking and carbon neutrality agenda has changed the financing environment of power enterprises by combining emission constraints, transition investment pressure, and green financial incentives. This study examines how dual-carbon policy affects the external financing costs of A-share listed power companies from 2015 to 2023. A multi-period difference-in-differences framework is used to identify policy effects across staged policy shocks, and financing costs are evaluated from both debt and equity dimensions. The results indicate that dual-carbon policy raises financing costs on average, especially for high-carbon enterprises and private firms. The dynamic estimates show an inverted U-shaped pattern: the cost pressure increases during the early policy-adaptation stage and then weakens as firms and markets gradually adjust. Mechanism tests show that carbon-risk repricing increases risk premiums, whereas green-finance incentives and ESG improvement partly offset the financing burden. The study contributes by integrating power-industry transition pressure with capital-market pricing, distinguishing debt and equity financing responses, and clarifying heterogeneous transmission channels under the dual-carbon policy framework.

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Publication Details

Journal
Environment Development and Sustainability
Published
2026-08-18
DOI
https://doi.org/10.1007/s10668-026-07822-3
Primary Topic
Energy, Environment, Economic Growth
Type
article
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article

Research on dual-carbon policy and enterprise financing costs in China’s power industry: Evidence from a multi-period DID model

Na Tong
Environment Development and Sustainability
Energy, Environment, Economic Growth
article

Research on dual-carbon policy and enterprise financing costs in China’s power industry: Evidence from a multi-period DID model

Na Tong
article en

Abstract

China’s carbon peaking and carbon neutrality agenda has changed the financing environment of power enterprises by combining emission constraints, transition investment pressure, and green financial incentives. This study examines how dual-carbon policy affects the external financing costs of A-share listed power companies from 2015 to 2023. A multi-period difference-in-differences framework is used to identify policy effects across staged policy shocks, and financing costs are evaluated from both debt and equity dimensions. The results indicate that dual-carbon policy raises financing costs on average, especially for high-carbon enterprises and private firms. The dynamic estimates show an inverted U-shaped pattern: the cost pressure increases during the early policy-adaptation stage and then weakens as firms and markets gradually adjust. Mechanism tests show that carbon-risk repricing increases risk premiums, whereas green-finance incentives and ESG improvement partly offset the financing burden. The study contributes by integrating power-industry transition pressure with capital-market pricing, distinguishing debt and equity financing responses, and clarifying heterogeneous transmission channels under the dual-carbon policy framework.

Environment Development and Sustainability
The University of Sydney (AU)
Openalex Percentile: Top 4%
Energy, Environment, Economic Growth
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