Abstract: The mandatory cleaner production audit (MCPA) is an important initiative to promote energy conservation, emission reduction and green transformation and upgrading of enterprises. This paper matches 16,841 enterprises that implemented MCPA between 2003 and 2012 to the Chinese Industrial Enterprise Database and the Chinese Enterprise Pollution Emission Database. And carrying out the MCPA as a quasi-natural experiment, a difference-in-differences model based on propensity score matching is used to identify the net effect of it on the reduction of enterprise sulfur dioxide (SO2) emissions. The paper discovers that MCPA can significantly reduce the intensity of SO2 emissions, and this finding is robust to multiple scenarios. According to heterogeneity analysis, the MCPA is more conducive to reducing the intensity of SO2 emissions in domestic enterprises, enterprises with low financing constraints and heavily polluting industries. Mechanism tests show that MCPA can reduce SO2 emissions by optimising energy structure, increasing energy efficiency, and encouraging green process innovation. Further analysis reveals that the MCPA is an effective tool for achieving the synergistic effect of reducing SO2 and carbon dioxide (CO2) emissions in enterprises, and it serves the dual function of winning the pollution battle while also achieving the carbon peaking and carbon neutrality goals.

Keywords: Mandatory cleaner production audit; Collaborative emission reduction; Green process innovation; Difference-in-differences model