Does Emission Trading Boost Carbon Productivity? Evidence from China’s Pilot Emission Trading Scheme

Di Zhou, Xiaoyu Liang, Ye Zhou and Kai Tang
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Di Zhou: School of Mathematics and Statistics, Guangdong University of Foreign Studies, Guangzhou 510006, China
Xiaoyu Liang: School of Business, Guangdong University of Foreign Studies, Guangzhou 510006, China
Ye Zhou: School of Business, Guangdong University of Foreign Studies, Guangzhou 510006, China
Kai Tang: School of Economics and Trade, Guangdong University of Foreign Studies, Guangzhou 510006, China

IJERPH, 2020, vol. 17, issue 15, 1-16

Abstract: As the country with the largest carbon emissions globally, the effective operation of China’s carbon emissions trading scheme (ETS) is of great importance to the global community in terms of mitigating climate change. This paper considers China’s pilot ETS launched in 2013 as a quasi-natural experiment. Exploring provincial industrial-level data that are more in line with the ETS coverage, the difference-in-difference-in-difference (DDD) model is used to evaluate the impact of the ETS on carbon productivity. Considering different pilot regions and industries, we also analyze the heterogeneous effect of ETS. Moreover, the mediating effects of technical progress and capital investment are explored. We find that China’s pilot ETS boosted carbon productivity. Among pilot regions, the best policy effectiveness appeared in Beijing, while the weakest effectiveness appeared in Chongqing. Among the pilot industries, the pilot ETS had better effectiveness in petrochemical and electric power industries and weaker effectiveness in building materials and transportation industries. Additionally, the pilot ETS promoted carbon productivity through both technological progress and capital investment, and the former contributed more. Our findings can provide empirical references and policy implications for nationwide implementation of ETS to further promote low-carbon economic transformation.

Keywords: emissions trading; carbon productivity; DDD; industrial heterogeneity; technological progress (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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