The Synergistic Effect of the Carbon Emission Trading Scheme on Pollution and Carbon Reduction in China’s Power Industry

Xiling Zhang, Xiaoqian Liu, Zeyu Zhang, Ruiyi Tang, Ting Zhang and Jian Yao ()
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Xiling Zhang: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Xiaoqian Liu: College of Carbon Neutrality Future Technology, Sichuan University, Chengdu 610065, China
Zeyu Zhang: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Ruiyi Tang: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Ting Zhang: College of Architecture and Environment, Sichuan University, Chengdu 610065, China
Jian Yao: College of Architecture and Environment, Sichuan University, Chengdu 610065, China

Sustainability, 2024, vol. 16, issue 19, 1-17

Abstract: The synergistic effect of pollution and carbon reduction can alleviate the dual pressure of improving environmental quality and reducing greenhouse gas emissions in China. The carbon emission trading scheme (CETS) is a crucial market-based tool for carbon emission reduction, and understanding its synergistic impact on air pollution control is essential. Based on data from 30 provincial panels in China spanning from 2007 to 2021, we employ the difference-in-differences (DID) method to analyze the synergistic effects of the carbon emission trading plan in the power industry and its influence mechanisms are examined. We observe that the CETS significantly enhances both pollution and carbon reduction in China’s power sector, particularly demonstrating effective synergy in reducing CO 2 , SO 2 , and PM 2.5 emissions. Furthermore, mechanism analysis reveals that the CETS achieves joint emission reductions by lowering energy consumption, influencing the power industry’s generation structure, promoting technological innovation among enterprises, and thereby realizing synergistic pollution and carbon reduction effects in China’s power sector. Heterogeneity analysis shows that regions with limited power facility, low electricity generation, and small economic scale exhibit the most pronounced synergistic benefits from pollution and carbon reduction efforts.

Keywords: carbon emissions trading scheme (CETS); power sector; difference-in-differences (DID) method; pollution and carbon reduction; power facility (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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