The Efficiency of China’s Carbon Trading Schemes: A Tale of Seven Pilot Markets

Yigang Wei, Yan Li, Julien Chevallier () and Michal Wojewodzki
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Yigang Wei: School of Economics and Management, Beihang University, Beijing 100191, China
Yan Li: Business School, Shandong University, Weihai 264209, China
Julien Chevallier: Economics Deparment, Universté Paris 8 (LED), 2 rue de la Liberté, 93526 Saint-Denis, France

Commodities, 2024, vol. 3, issue 3, 1-21

Abstract: This study evaluates the efficiency of China’s seven emission trading schemes (ETS) piloted in 2013. We evaluate seven pilots’ overall technical and scale efficiencies and temporal dynamics during 2014–2023. We use a bootstrap correction data envelopment analysis (bootstrap-DEA), which guarantees a more accurate efficiency estimation than the traditional DEA model. The results show that the average overall (pure technical) efficiency of the seven pilot markets increased from 0.612 (0.844) in 2014 to 0.898 (0.990) in 2023. Furthermore, we document that seven ETS pilots differ remarkably in efficiency and transaction price, whilst all have shortages. Specifically, the small-scale market transaction is the main constraint effect on the average scale efficiency of the ETS. This study provides concrete recommendations for policy makers to consummate institutional designs to improve ETS efficiency.

Keywords: emission trading scheme (ETS); efficiency evaluation; bootstrap-DEA; pure technical efficiency; scale efficiency; China (search for similar items in EconPapers)
JEL-codes: C0 C1 C2 C3 C4 C5 C6 C7 C8 C9 D4 E3 E6 F0 F1 F3 F4 F5 F6 G1 O1 O5 Q1 Q2 Q4 (search for similar items in EconPapers)
Date: 2024
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