Global warming has been a major study issue worldwide , and carbon emissions have considerably contributed to climate change . According to the Sixth IPCC Assessment Report, global warming is anticipated to approach or surpass 1.5 °C in the next 20 years, based on projections of average temperature increases. Carbon emissions have recovered primarily to pre-Newcastle pneumonia epidemic levels, reversing the temporary drop caused by the pandemic in 2020, according to BP’s World Energy Statistics Yearbook (2022). This growth is primarily driven by emerging economies, with China accounting for 76.9% of the increase. As a result, China’s environmental regulations face the complex and urgent challenge of reducing CO2 emissions. Achieving China’s goal of a sustainable low-carbon economy is contingent on cutting carbon dioxide emissions [3,4].
In response to local and United Nations climate-discussion criticism, the Chinese government is reducing its carbon dioxide emissions. It has committed to cutting carbon emissions in a variety of bold ways. For instance, within the framework of the Paris Agreement, China pledged to achieve carbon peaking by 2030 and carbon neutrality by 2060. As the world’s largest developing nation, China will swiftly transition from carbon peaking to carbon neutrality and become a world leader in carbon abatement.
It is crucial to determine the binding influence of technological progress on carbon dioxide emissions in the construction sector . As a major pillar sector in the country’s growing urbanization, the construction industry has contributed tremendously to the nation’s economic growth. However, there are issues of excessive energy use and emissions . The building industry accounts for around 40% of worldwide carbon emissions. The Chinese construction industry is the largest in the world. According to the China Building Energy Consumption and Carbon Emissions Study (2022), the total energy consumption of the entire building process in 2020 was 2.27 billion tons, accounting for 45.5% of the country’s total energy consumption; the total carbon emissions of the building process as a whole in 2020 was 5.08 billion tons of carbon dioxide, accounting for 50.9% of the country’s carbon emissions. Using toxic fuels, primary energy consumption, and antiquated technology have increased hazardous emissions and environmental damage , resulting in severe emission problems . However, as in all other industries, when new technologies and equipment are generated and put into the construction process, high-value-added, low-energy-consuming products are produced. Energy consumption is more efficient, and construction costs are reduced with lower carbon emissions . New technology-based tools and equipment imply the development of technological innovations [10,11,12]. As a result, green innovation is a viable path for the construction industry to realize energy-saving and low-carbon development . This has a positive impact on economic, social, and ecological benefits.
Scholars have researched whether green innovation can cut carbon emissions extensively, but a consensus has yet to be reached. Most academics believe that green innovation may reduce carbon emissions while improving environmental quality [14,15]. According to empirical research, green innovation is an effective strategy for achieving a “win-win” situation with respect to high-quality economic growth and environmental conservation . The correlation between green innovation and carbon abatement has also been demonstrated [17,18]. For instance, Du et al. (2019)  found that a single threshold effect regulated the impact of environmental innovation on the performance of carbon dioxide emissions. Conversely, other researchers contend that green technology cannot reduce emissions [20,21,22]. According to Weina et al. (2016) , Italy’s green innovations may have enhanced environmental output but have not appreciably reduced carbon emissions.
Furthermore, the correlation between green technologies and greenhouse-gas emissions must be better studied, especially in developing countries [24,25]. Other studies have found a trend of increasing carbon pollution across economies, particularly in developing countries undergoing rapid economic growth and industrialization [26,27]. The effect of green technology on CO2 reduction has been found to differ dramatically between economies . For instance, Dauda et al. (2019)  found that innovation has reduced CO2 emissions in the G6 while increasing them in the Middle East, North Africa, and the BRICS. Chen et al. (2020)  found that technological innovation in high-income, high-tech, and high-CO2-emitting countries can significantly reduce emissions in neighboring countries, while R&D intensity in other countries can even increase CO2 emissions. Many European countries are also facing economic transformation . It should be mentioned that analogous research relies on a worldwide sample and does not include China. Nevertheless, research in this area is necessary for adopting and improving decarbonization measures in the world’s largest rising economy.
The bulk of studies have concentrated on the effect of environmentally friendly innovation on environmental quality. Consequently, further research is necessary to directly demonstrate the carbon-abatement benefits of green technology innovations in the construction industry. Numerous studies have investigated the factors that influence CO2 emissions in the building sector. However, most of the literature focuses on energy consumption , urbanization , economic growth , environmental regulation [35,36], and carbon rights . Fewer studies consider green innovation as a central explanatory factor. Most domestic and international experts and scholars [6,8] have concluded that technological innovation and industrial carbon emissions are closely linked through different empirical studies. Green technologies are critical to attaining sustainable development goals while having the least detrimental impact on the natural environment [38,39,40,41].
Based on current research, we pose two questions: (1) Can green innovation cut carbon emissions effectively? (2) Does green innovation have a non-linear or linear relationship with dioxide emissions? To address the above topics, using panel data from 30 provinces, the impact of green innovation on CO2 emissions in the construction sector between 2005 and 2020 is empirically explored. The results of green innovations above and below the threshold are validated using a two-way fixed-effects model followed by a double-threshold model. This study establishes a link between carbon dioxide emissions and ecologically friendly innovation. According to the two-way fixed-effects model findings, green innovation has a substantial positive influence on CO2 emissions reduction in the Chinese construction industry. The panel threshold-effects model results suggest a double threshold effect of green innovation and carbon emissions when the intensity of environmental regulation is used as the threshold variable. Furthermore, we discovered that green innovation cuts carbon emissions considerably through environmental regulation. Finally, the abatement impact varies significantly between regions, innovation elements, and types of development. Although this article found a significant impact of green technology innovation on the total carbon emissions reduction in the construction industry, we did not reach a significant conclusion regarding the proportion of emissions reduction. This could guide regions in China to realize the carbon-reduction effects of green innovation.
The following are four major contributions: First, using a unified statistical analysis method, we investigate the correlations between carbon dioxide emissions and green innovation, both linearly and non-linearly. The global effect of environmentally friendly innovation on environmental quality, notably carbon emissions, is questionable. In this paper, we study the influence of green innovation on CO2 emissions using a two-way fixed-effects model followed by a double-threshold model. Environmental regulations are included in the study framework for the role of green technology in reducing carbon dioxide emissions. This may contribute to the advancement of research in linked domains. Second, this essay expands the study of green innovation in carbon emissions based on statistics from the Chinese construction sector. We aim to determine whether green technologies provide the building sector with viable ways to combat climate change. A comprehensive evaluation of the role of green innovation in abating emissions in China’s construction sector facilitates the creation of decarbonization strategies. In addition, it may serve as a guide for other developing nations as they transition to low-carbon economies. We have discovered a probable mechanism. Numerous studies have yet to examine the indirect impact mechanisms of green innovation in reducing CO2 emissions in the construction industry. Using a mediation-effect model based on environmental regulation, the mechanism of influence of green innovation on dioxide emissions is examined. Finally, we investigate the varying effects of green innovation on CO2 emissions in different regions, innovation variables, and province types. Due to the potential diversity of green innovation and dioxide emissions in the building sector, only some studies have assessed whether the spatial relationship varies. This facilitates the formulation of green development plans tailored to local circumstances.
The remaining sections of the paper are organized as follows. Section 2 describes the theoretical analysis and research hypotheses. Technical and research data are presented in Section 3. Section 4 shows the estimated benchmark regression findings, the mediation effect, and heterogeneity analysis results. The results of the study are discussed further in Section 5. The Section 6 summarizes the findings and provides policy suggestions.
2. Theoretical Analysis and Basic Assumptions
2.1. Green Innovation and Carbon Emissions
According to modern economic growth theory, technological progress is one of the major factors in economic growth. Innovation is a requirement for technology development which can reduce the harmful effects of economic growth on the environment . The research and application of green innovations can drive technological progress and industrial transformation, thereby achieving the goal of reducing carbon emissions. This has been well documented internationally. For example, the United Nations Framework Convention on Climate Change (UNFCCC) has embraced “green technology transfer” as a key tool in the fight against climate change. Specifically, green innovations in energy, transport, and buildings can significantly curtail CO2 emissions by improving energy efficiency and promoting new energy sources.
The relationship between green innovation and CO2 emissions will vary between the initial and subsequent phases. At the initial stage, green innovation has a relatively small effect on CO2 emissions abatement. This is because it takes time for a new technology or product to become widespread and diffused. In the subsequent stages, however, the effect of CO2 emissions abatement will gradually increase as green innovation is widely used and its market share increases. The diffusion of green innovations should therefore be a long-term and gradual process. Innovations and technological developments may result in hazardous waste  but may also pave the way for eco-friendly technologies with lighter emission rates. Thus, the relationship can be either positive or negative.
There may be a complex non-linear relationship between green innovation and carbon abatement, with the intensity of environmental regulation being a significant threshold variable. Innovation asymmetry theory suggests that the degree of environmental regulation can create innovation differentiation in the marketplace. When environmental regulations are less stringent, firms may adopt more traditional technologies and experiences to meet environmental requirements. Only adopting more advanced and cutting-edge technologies and innovative solutions can give firms a comparative advantage in the competitive marketplace when the environmental regulation intensity increases. This advantage is more difficult to replicate. Therefore, the higher the environmental regulation intensity, the greater the differentiation of the innovation. The following research hypotheses were generated based on the above analysis:
Green innovation can significantly reduce carbon emissions in the construction industry.
There is a non-linear relationship between green innovation and carbon reduction.
2.2. The Mediating Role of Environmental Regulation
Innovation theory suggests that firms tend to invest more in eco-friendly technological innovations under the influence of environmental regulatory intensity. When environmental policies and regulations are strengthened, the cost to companies of implementing carbon reductions and reducing their environmental impact increases. As a result, companies tend to adopt more optimal and cost-effective methods to reduce carbon emissions through innovation. Through extensive and in-depth research into environmental regulatory oversight, scholars have found that it can significantly affect technological innovation . The higher the environmental regulation intensity, the tighter the environmental constraints on companies. Companies will have to face stricter emissions standards and environmental responsibilities, which will lead to innovations in technology and processes to improve energy efficiency and cut CO2 emissions.
The “Porter Hypothesis” posits that environmental regulation may force firms to innovate and enhance their competitive advantage in the marketplace . Adequate environmental regulation has a significant impact on green innovation. In a competitive market environment, firms transform elements of environmental regulation into regional factors of green innovation, enhancing the disincentives to waste emissions. According to the Porter Hypothesis, the relationship between environmental regulation, eco-friendly technologies, and environmental pollution has been explained more scientifically and clearly. In addition, studies have revealed an inverted U-shaped relationship between environmental regulation and environmental pollution . Therefore, environmental regulation plays a mediating role when studying the CO2 abatement effects of technological innovation. Therefore, we propose the following research hypothesis:
Green innovation reduces carbon emissions by promoting the intensity of environmental regulation.
3. Materials and Methods
3.1. Model Specification
3.1.1. Carbon-Emissions Measurement
Numerous research studies have investigated the quantification of CO2 emissions from the building industry. Generally, these studies can be categorized into three groups: the IPCC approach, the input–output analysis technique, and the life-cycle assessment method. First, carbon emissions are evaluated using energy consumption and carbon dioxide emission factors [47,48]. Furthermore, carbon emissions are estimated by assembling input–output tables and building related mathematical models describing the link between initial input, intermediate input, intermediate output, total input and total output, and final output for each economic system sector . Finally, bottom-up emissions of a product or process are evaluated throughout its life cycle by circling carbon emissions, accounting limits, and collecting carbon emissions data [50,51]. In recent years, the amount of academic research using IPCC methods to study the carbon emissions from the building sector has increased significantly. The primary reasons include the IPCC method’s more flexible data selection, straightforward accounting methods, and more reliable computation outcomes. Consequently, the IPCC approach was adopted to estimate carbon emissions in this article.
Based on the CEADS database and regarding Shan et al. (2016) , following the IPCC approach, the province-specific dioxide emissions from the energy used by the building sector were calculated.
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