Effect of higher NOx emissions tax rates on carbon efficiency: Quasi-natural experiment based on China's NOx emissions tax rate reform

Abstract This study employs a quasi-natural experiment with a difference-in-differences (DID) approach to estimate the impact of China’s nitrous oxide (NO x ) emissions tax reform on carbon efficiency (CE), defining the reform as the adoption of rates above the national minimum to precisely capture regional heterogeneity. Results reveal that the NO x emissions tax rate reform significantly accelerates sample cities’ CE progress and has beneficial spatial spillover effects, driving CE improvement in surrounding areas. The reform exhibits more pronounced CE enhancement effects in eastern China and cities with a larger share of secondary industry. Furthermore, the reform effectively synergizes with policy measures such as clean energy promotion, air pollution prevention and control plans, and the Low-Carbon City pilot policy, yielding more positive outcomes. The NO x emissions tax rate reform enhances CE through promoting green technological innovation and curbing industrial agglomeration in pilot regions. Furthermore, synergistic NO x and carbon dioxide (CO 2 ) reduction is the most comprehensive and primary channel for promoting CE progress through NO x emissions tax rate reform. The findings reveal the ancillary influence of NO x emissions tax on CO 2 reduction and their potential as an interim instrument before China enacts a carbon tax, offering a practical, efficiency-aligned mitigation pathway.