Is Emissions Trading Scheme (ETS) an Effective Market-Incentivized Environmental Regulation Policy? Evidence from China’s Eight ETS Pilots

Shanglei Chai, Ruixuan Sun, Ke Zhang, Yueting Ding and Wei Wei
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Shanglei Chai: Business School, Shandong Normal University, Jinan 250358, China
Ruixuan Sun: Business School, Shandong Normal University, Jinan 250358, China
Ke Zhang: Business School, Shandong Normal University, Jinan 250358, China
Yueting Ding: School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China
Wei Wei: Center for Energy, Environment & Economy Research, School of Management, Zhengzhou University, Zhengzhou 450001, China

IJERPH, 2022, vol. 19, issue 6, 1-18

Abstract: Climate change and environmental issues caused by carbon emissions have attracted the attention of governments around the world. Drawing on the experience of the EU, China is actively developing a national carbon emissions trading market, trying to encourage emission entities to incorporate carbon emissions reduction into production and consumption decisions through carbon pricing. Is this scheme an effective market-incentivized environmental regulatory policy? Since China successively launched ETS pilots in 2013, the effectiveness of reducing carbon emissions has become one of the current focus issues. This study uses the difference-in-differences (DID) method to evaluate the impact of ETS implementation on emissions reduction and employs the Super-SBM model in data envelopment analysis (DEA) to evaluate the emission-reduction efficiency of eight ETS pilots in China. We find that the carbon trading policy has achieved emission-reduction effects in the implementation stage, and the greenness of economic growth has a significant positive impact on regional GDP. The establishment of China’s unified carbon market should be coordinated with regional development. Some supporting measures for regional ecological compensation and the mitigation of regional development are yet to be adopted.

Keywords: environmental regulation policy; carbon emissions reduction effect; emission trading scheme (ETS); policy evaluation; difference-in-differences (DID); data envelopment analysis (DEA) (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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