How do energy-saving policies improve environmental quality: Evidence from China's Top 10,000 energy-consuming enterprises program

Treating China's Top 10,000 Energy-Consuming Enterprises Program (T10000P) as a quasi-natural experiment, this is the first study to investigate the synergistic effects of the representative energy-saving policy on environmental quality at the micro-level. We create a panel data set by matching China's Environmental Statistics Database, Industrial Enterprise Database, and State Intellectual Property Office Database, and employ the difference-in-differences model to identify the policy's environmental effects and their mechanisms. The results show that the T10000P can effectively lower chemical oxygen demand (COD) and sulfur dioxide (SO2) emissions, which still hold after a series of robustness checks, indicating that the policy has a significant synergistic effect on environmental quality improvement. Furthermore, compared with small polluters, the T10000P has a higher pollutant emission inhibition effect on large polluters. Such a positive environmental impact is confirmed for energy-intensive, large, rather than non-energy-intensive and small enterprises, showing heterogeneous effects across different enterprises. We also find that promoting green technology innovation and environmental compliance are the important channels through which the policy improves environmental quality. Therefore, the energy-saving policy can improve environmental quality by setting constrained targets on energy consumption, especially in developing countries.