Energy-saving and emission-reduction fiscal policy and green innovation in high-emission firms: a quasi-natural experiment from China

The Energy-Saving and Emission-Reduction Fiscal Policy Comprehensive Demonstration Cities program represents a targeted green policy instrument and serves as an important policy initiative for advancing China’s carbon peaking and carbon neutrality goals. Using the implementation of this pilot program as a quasi-natural experiment, this study examines the impact of the policy on corporate green innovation based on a sample of listed firms in high-emission industries in China from 2007 to 2024. Employing a multi-period difference-in-differences (DID) model, we find that the Energy-Saving and Emission-Reduction Fiscal Policy significantly promotes corporate green innovation. The mechanism analysis further indicates that the alleviation of financing constraints and the optimization of human capital structure may serve as important mechanisms through which the ESER fiscal policy promotes corporate green innovation. Meanwhile, environmental regulation exerts a negative moderating effect on this relationship. Further analysis demonstrates that the positive effect of the policy on green innovation is more pronounced among large-scale enterprises, firms located in central cities, and firms in regions with stronger fiscal capacity. This study provides empirical evidence on the micro-level innovation effects of green fiscal policies and identifies the boundary conditions under which such policies influence corporate green innovation.