Emissions Reduction Effects and Carbon Leakage Risks of Carbon Emissions Trading Policy: An Empirical Study Based on the Spatial Durbin Model

Hannuo Qiu, Bian Yang, Ying Liu and Linping Wang ()
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Hannuo Qiu: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Bian Yang: College of Economics, Sichuan Agricultural University, Chengdu 611130, China
Ying Liu: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China
Linping Wang: College of Economics and Management, Fujian Agriculture and Forestry University, Fuzhou 350002, China

Sustainability, 2024, vol. 16, issue 21, 1-19

Abstract: China’s carbon emissions trading policy represents a significant institutional innovation designed to advance the country’s economic and social development towards sustainability and low-carbon growth. This study investigates the effects of China’s carbon emissions trading policy by employing the difference-in-differences model and spatial Durbin model, using provincial panel data spanning from 2005 to 2020. We find that the carbon emissions trading policy can inhibit per capita carbon emissions in the pilot areas. This work is primarily driven by green technological innovation and the upgrade of industrial structure. Furthermore, the carbon emissions trading policy exhibits a positive spatial spillover effect, inhibits per capita carbon emissions in the areas adjacent to the pilot through demonstration effect and competition effect, and does not cause carbon leakage. These findings reveal the policy’s effectiveness in emissions reduction, and may be useful reference for promoting sustainable economic and social development. This is of great practical significance for exploring how to optimize environmental governance measures, avoid carbon leakage, and achieve balance and fairness in responsibilities in achieving low-carbon sustainable development. Our study proposes policy recommendations for synergizing the national trading market in China.

Keywords: carbon emissions trading policy; carbon emissions reduction; carbon leakage; sustainability; difference-in-differences; spatial Durbin mode; spatial spillover effect (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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