Do carbon ETS pilots improve cities' green total factor productivity? Evidence from a quasi-natural experiment in China

Changsheng Li, Yaping Qi, Shaohui Liu and Xu Wang

Energy Economics, 2022, vol. 108, issue C

Abstract: Improving green total factor productivity (GTFP) is required for China's economic catch-up towards the global frontier. As a vital market-driven environmental regulation instrument, China's carbon emissions trading scheme (ETS) plays a great role in achieving this task. In this paper, we constructed a Difference-in-Difference (DID) model to examine the impact of China's ETS pilot policy on city-level GTFP. The results show that the GTFP in ETS pilot cities is increased by 11.4% on average compared with non-pilot cities. However, the positive impact exists only in a short term and lasts five years since policy implementation. Heterogeneity analysis shows that, compared with non-industry-dominated cities, the GTFP in industry-dominated cities has been greatly promoted due to the ETS pilots. In addition, China's ETS pilots produce significant spatial spillover effects on neighboring non-pilot cities. Finally, several recommendations concerning China's ETS policy and GTFP improvement are put forward.

Keywords: China's carbon ETS pilots; Green total factor productivity; Heterogeneity; Spatial spillover effect (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:108:y:2022:i:c:s0140988322001098

DOI: 10.1016/j.eneco.2022.105931

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