The Spatial Spillover Effect and Mechanism of Carbon Emission Trading Policy on Pollution Reduction and Carbon Reduction: Evidence from the Pearl River–West River Economic Belt in China

Zhigao Liao (), Yufeng Bai, Kerong Jian and Wongvanichtawee Chalermkiat
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Zhigao Liao: School of Economics and Management, Guangxi University of Science and Technology, Liuzhou 545006, China
Yufeng Bai: School of Economics and Management, Guangxi University of Science and Technology, Liuzhou 545006, China
Kerong Jian: School of Economics and Management, Guangxi University of Science and Technology, Liuzhou 545006, China
Wongvanichtawee Chalermkiat: Graduate School of Management, Siam University, Bangkok 10160, Thailand

Sustainability, 2024, vol. 16, issue 23, 1-25

Abstract: China faces issues such as air pollution and global climate change, and the Carbon Emission Trading Policy (CETP) has attracted considerable attention as a core policy tool for achieving the “dual carbon” goals. Based on panel data from the Pearl River–West River Economic Belt (PRWREB) from 2008 to 2021, we use the Synthetic Control Method (SCM) and Spatial Difference-in-Differences (S-DID) models to explore the pollution reduction and carbon reduction effects of the CETP and its spatial heterogeneity. Our analysis reveals several interesting insights. First, the CETP has promoted a 34.1% overall reduction in pollution and carbon levels in the pilot areas, with sustained effects. Moreover, spatial spillover effects can reduce the pollution and carbon levels in the economic belt by 29.9%. Second, the pollution and carbon reduction effects of the CETP are more significant in regions with better economic development and active carbon trading. It has the best synergistic reduction effects on CO 2 and SO 2 but is less effective in reducing PM 2.5 . Third, the spillover effects of the CETP on technological innovation are greater than the direct effects, with the most noticeable pollution and carbon reduction outcomes. The overall negative effect on industrial structure is that it fails to promote pollution and carbon reduction. The emission reduction mechanisms vary for different targets: CO 2 and PM 2.5 are related to energy efficiency, SO 2 to advancing industrial structure, and smoke and dust to technological innovation. Based on the research conclusions, we propose to improve the coordinated governance system for carbon and pollution, advance pollution and carbon reduction according to local conditions, and implement targeted emission reduction and efficiency enhancement.

Keywords: carbon emission trading policy; pollution reduction and carbon reduction synthesis control; spatial spillover effect; mechanism of action (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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