Abstract:
This study investigates the impact of firms' emissions on their investments in renewable energy. Stricter environmental regulations are aimed at incentivizing firms to invest in low-emission/pollution technologies such as renewable energy. Recently, the People's Republic of China (PRC) announced a large number of environmental regulations in order to address emission and air pollution issues. Using the unique data set of annual firm-level data of 147 firms from the PRC that invested in renewable energy projects domestically during the period 2015-2020, our results demonstrate that firms with greater air pollution or greenhouse gas emissions (measured as a share of revenue) invest more in renewable energy (measured as a share of equity). The results have survived several robustness checks.