The Incremental Impact of China's Carbon

Mei Lu, Michael Pollitt, Ke Wang and Yi-Ming Wei

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: China has adopted the carbon emissions trading system (ETS) due to its advantages on efficiency and cost grounds. Prior to the national carbon market, China operated seven ETS pilots as experiments for eight years in addition to the existing Energy Conservation and Carbon Abatement Target Responsibility System (ECCA-TRS) in order to accumulate experience with carbon markets. However, the incremental effects of these pilots are unclear so far. Here, we show that the ETS pilots have produced no additional carbon abatement effect or abatement cost-saving effect, while ECCA-TRS contributed primarily to the relative decline in CO2 emissions and absolute decline in CO2 intensity of covered industries in pilot regions. A binding target is necessary to permit ETS to act as the backstop emissions constraint. Adjusting local governments' abatement achievement using the buy-in and sell-out of carbon allowances can allow the ECCA-TRS and ETS to act as well-integrated instruments.

Keywords: Carbon Emissions Trading Scheme; Target responsibility system; Policy evaluation; Triple difference-in-differences (search for similar items in EconPapers)
JEL-codes: L94 Q54 (search for similar items in EconPapers)
Date: 2023-12-29
New Economics Papers: this item is included in nep-cna, nep-ene and nep-env
Note: ml2112, mgp20
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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