Does China's regional emission trading scheme lead to carbon leakage? Evidence from conglomerates

Ling-Yun He and Kun-Xian Chen

Energy Policy, 2023, vol. 175, issue C

Abstract: This study uses the list of ETS pilot firms and China's Administrative Registration Database to build the conglomerate of pilot firms and then uses China's National Tax Survey Data from 2009 to 2016 to analyze whether ETS leads to carbon leakage in conglomerates. The results show that ETS promotes carbon transfer from pilot firms to their production-connected firms, carbon emissions and emission intensity of production-connected firms have been significantly improved. After controlling cofounding policies, conducting placebo test and other robustness analysis, the results are still valid. The ways of carbon leakage include output, investment, labor, and energy consumption. Investment transfer occurs at the policy issue stage, and pilot firms tend to transfer production activities with higher energy intensity. Heterogeneity analyses find that the carbon leakage caused by ETS is transferred to regions with low environmental regulations and low labor costs. In further analysis, we verify no negative carbon leakage and compare the carbon emission reduction of EST to pilot firms with the carbon leakage of EST to production-connected firms, though ETS can reduce carbon emissions, its effect is far overestimated.

Keywords: Carbon emission trading; Carbon leakage; Conglomerate; PSM-DID (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421523000666
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:175:y:2023:i:c:s0301421523000666

DOI: 10.1016/j.enpol.2023.113481

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().