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I can't understand why the writer used -ing form of verb in my example after conjunctive adverb "therefore".

However, I know that 'therefore', 'however', 'hence', 'nevertheless', .. are conjunctive adverbs. They have to connect two independent clauses.

I am still confused why we use 'ing' form after adverbs, because we often use 'ing' form after prepositions not adverbs.

"They could also impose ‘green taxes’ on drivers and airline companies. In this way, people would be encouraged to use public transport and (they would be encouraged) to take fewer flights abroad, therefore reducing emissions."

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    It should be thereby – Tᴚoɯɐuo May 24 '17 at 11:12
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"Reducing emissions" is a participle phrase that is part of a larger adverbial clause "therefore reducing emissions" which modifies the sentence's verb (which modifies would encourage).

What may make this a bit more confusing is that the sentence uses a passive construction and the subject of the sentence, governments is only implied and never actually appears, so in the interest of making this analysis easier, it might be easier if we rewrote the sentence using an active form:

In this way, governments would encourage people to use public transport and to take fewer flights abroad, therefore reducing emissions.

Therefore, along with hence and thus, can introduce a adverbial phrase formed with a present participle. As explained here:

Hence, therefore or thus can be added immediately before an adverbial phrase showing result https://learningenglishgrammar.wordpress.com/adverbial-phrases-with-present-participles/

Notice the example sentence from the site above: "They introduced certain rulers, (hence / therefore or thus) complicating things."

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