Can China’s Industrial SO 2 Emissions Trading Pilot Scheme Reduce Pollution Abatement Costs?

Zhengge Tu and Renjun Shen
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Zhengge Tu: School of Economics and Business Management, Central China Normal University, 152 Luoyu Road, Wuhan 430079, China
Renjun Shen: School of Economics and Business Management, Central China Normal University, 152 Luoyu Road, Wuhan 430079, China

Sustainability, 2014, vol. 6, issue 11, 1-25

Abstract: This paper evaluates the effects of China’s industrial SO 2 emissions trading pilot scheme (SETPS) on the pollution abatement costs (PAC) from the past and future perspective. We apply the kernel-based propensity score difference-in-difference method to examine the effects of SETPS on the average pollution abatement costs (APAC) and the marginal pollution abatement costs (MPAC) based on the environment data from the industrial sector of 29 provinces in China over the period of 1998 to 2011. Our findings are that SETPS failed to reduce PAC as a whole. During 2002 to 2011, SETPS increased APAC by 1310 RMB per ton on average and had an insignificant negative effect on MPAC. Nevertheless, the conclusions would be markedly different if we separately investigated the effects of SETPS each year of the pilot period. The positive effects of SETPS on PAC started to appear since 2009, and SETPS significantly reduced both APAC and MPAC, especially in 2009 and 2011.

Keywords: SO 2 emissions trading pilot scheme (SETPS); pollution abatement costs (PAC); difference-in-difference method; network DEA (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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