Specialized, Diversified Agglomeration and CO2 Emissions —An Empirical Study Based on Panel data of Chinese cities

Taking proactive steps to control carbon emissions(CO2) in the industrial sector is crucial for meeting the "30.60" carbon reduction commitment expediently. This study meticulously investigates the correlation and underlying mechanisms between industrial agglomeration and CO2 emissions, employing the fixed-effect model and regulatory-effect model across 283 cities from 2006 to 2019.The findings reveal the following: Firstly, specialized agglomeration exacerbates CO2 emissions, while diversified agglomeration substantially contributes to their reduction. Notably, the carbon reduction effect of industrial diversification is particularly pronounced in the southern region, carbon peak region, and industrial transfer region. Secondly, delving into mechanisms uncovers that specialized agglomeration's exacerbating effect stems from labor misallocation, whereas diversified agglomeration mitigates CO2 emissions by enhancing both labor and capital allocation. Thirdly, regarding spatial spillover effects, specialized agglomeration not only increases CO2 emissions locally but also elevates nearby emissions, whereas diverse agglomeration not only reduces local CO2 emissions but also radiates carbon reduction in adjacent areas. To fully realize the benefits of agglomeration in reducing carbon emissions and promoting regional development, the government should thus support diversified agglomeration, remove any barriers preventing the flow of production factors, and fortify interregional industrial division and cooperation.