Abstract：Environmental problems caused by carbon emissions have negative impacts on human life and society. It is therefore important to identify potential approaches to carbon emission reduction. In this study, we analyze the impact fscal expenditure on science and technology has on carbon emissions using a panel dataset from 2007 to 2016 at Chinese provincial levels. An instrumental variable approach is employed to address the potential endogeneity of fscal expenditure. Our results show that fscal expenditure on science and technology has a signifcant and negative efect on carbon emissions by improving green innovation, economic structure upgrade, energy consumption structure, and energy efciency. A one hundred RMB yuan increase in fscal expenditure on science and technology would lower carbon emissions by 0.654 tons. Heterogeneity analysis reveals that the carbon reduction efects of fscal expenditure on science and technology are larger in regions where internet coverage and the share of industry in the economy are high. Our results highlight the signifcant role of fscal expenditure on science and technology in carbon reduction. 

Keywords：Fiscal expenditure，Climate change，Carbon reduction，Green technology，Carbon neutrality