05 May 2025
A research paper co-authored by Dr King Yoong Lim from department of Economics in International Business School Suzhou at Xi’an Jiaotong-Liverpool University titled "Environmental Policy and Distance to Firms: An Analysis of Publicly Listed Firms in China", has been published for publication in the prestigious journal Energy Economics (ABDC A*; Impact Factor - 13.6; ABS 3).
Since the United Nations adopted the Kyoto Protocol on December 11, 1997, governments worldwide have implemented various environmental policies. Among developing nations, China has taken a leadership role, exemplified by its ambitious environmental reform plans in 2013 and the pledge to achieve carbon neutrality by 2060. As the world’s largest contributor to greenhouse gas emissions, China has emphasized sustainable development in its 20th National Congress and subsequent plans, prioritizing the construction of a green and low-carbon economic system. Central to this strategy are environmental policy instruments such as the green credit policy and Emission Trading Schemes (ETS). While China has implemented an unprecedented number of environmental policies over the past decade, the complementarity (or rivalry) between these policies remains poorly understood. Notably, there is a knowledge gap regarding how – and whether – these policies stimulate knowledge spillover, corporate environmental responsiveness, and the adoption of Environmental Investments (EI).
Drawing on the spatial learning properties of two key policies – the Emission Trading Scheme (ETS) and Waste Recycling Facilities (WRF) – Dr Lim and his collaborators developed a novel theoretical framework to explain environmental investment choices by Chinese listed firms. This framework accounts for the endogenous spatial effects of these two policy instruments. A unique aspect of the study is its focus on firms incurring both recyclable and carbon-intensive waste disposal costs from production inputs. Through econometric analysis of sample firms in seven provinces with ETS pilot platforms, the team found that proximity to WRFs correlates positively with EI adoption, which in turn is associated with higher labor productivity. However, peer learning effects adjusted for provincial ETS prominence exhibit an opposite trend: proximity to neighboring firms making environmental investments appears to induce a free-riding effect. Spatial model estimations for EI firms reveal positive spillover effects (both observable and unobservable), yet the free-riding effect persists. In other words, while overall spatial spillovers are positive, ETS-induced learning shows an anti-"keeping up with the Joneses" effect. Additionally, policy rivalry is evident: the free-riding effect not only neutralizes the ETS policy’s impact on labor productivity among 219 EI firms but also mitigates the positive effects of WRF proximity. These findings offer critical insights for designing and implementing future environmental policy instruments.
The publication of this research provides academia with deeper insights into the relationship between China’s environmental policies and corporate behavior. It also offers robust theoretical and empirical support for policymakers to optimize environmental policy frameworks.
Dr King Yoong Lim's main research interests are in the areas of development macroeconomics, the economics of crime, innovation strategy (macro and micro) and energy economics. He has to date published several articles in ABS3/ABDC-A and above journals, with these including Research Policy, Energy Economics, Economic Modelling, Macroeconomic Dynamics and the Journal of Macroeconomics and. Dr Lim is also an active participant in the wider research and policy community and was an active external evaluator of the REF 2028 macroeconomics research findings at Swansea University, UK. He has been a three-time STC advisor at the World Bank Group, has contributed to Malaysia's Capital Markets Master Plan and National Innovation Strategy (and its associated GLC Innovation Transformation Program), and was the lead advisor in the review and redevelopment of the Kenya Revenue Authority's National Tax Revenue Forecasting Framework for 2019.
Energy Economics is a premier journal in the fields of energy economics and energy finance, published by Elsevier. It covers a wide range of themes, including but not limited to the exploitation, conversion, and use of energy, markets for energy commodities and derivatives, regulation and taxation, forecasting, environment and climate, international trade, development, and monetary policy.
With an impact factor of 13.6, a CiteScore of 18.6, an SJR of 3.555, and an SNIP of 2.637, Energy Economics is in the second zone of the Chinese Academy of Sciences' classification, indicating its excellent position in the field of economics1. It plays a significant role in promoting academic research and knowledge dissemination in the fields of energy economics and energy finance, and provides valuable references for relevant policy - making and practical applications.
05 May 2025