Quantify the Effect of China’s Emission Trading Scheme on Low-carbon Eco-efficiency: Evidence from China’s 283 Cities

Miaomiao Tao (), Pierre Failler (), Lim Thye Goh, Wee Yeap Lau, Hanghang Dong and Liang Xie
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Miaomiao Tao: University of Malaya
Pierre Failler: University of Portsmouth
Hanghang Dong: University of Malaya
Liang Xie: Beijing University of Technology

Mitigation and Adaptation Strategies for Global Change, 2022, vol. 27, issue 6, No 2, 33 pages

Abstract: Abstract The establishment of a carbon trading market is crucial for China to fulfil its carbon emission commitments through a market mechanism. As a market-based environmental regulation instrument, Emission Trading Scheme (ETS) has been attracted increasing attention worldwide, while the effect of ETS on low-carbon economy efficiency (LEE) has not been fully investigated, thus inspiring us to fulfil this research gap. Using the panel data of China’s 283 selected prefecture-level cities during 2006–2017, we adopted the difference-in-differences (DID) model, propensity-score-matched DID (PSM-DID) model, and the spatial DID model to model the direct and indirect effects of China’s ETS on LEE at national, regional, and local (resource-based cities with different development stages) levels. The robust results yield that ETS directly and significantly improved China’s LEE at the national level. Still, the LEE in ETS pilot region will increase by approximately 4.3% compared with untreated cities, while the spatial heterogeneity of this effect is captured at regional and local levels, which emphasises the necessity of a completed market construction and classified supervision. The results of this paper provide important insights for strengthening the policy design of a nationwide carbon market, and a reference point for other regions and countries, especially developing countries, in refining a carbon trading market.

Keywords: Emission trading system; Low-carbon economy efficiency; Quasi-natural experiment; Spatial spillover effect; Spatial heterogeneity (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11027-022-10015-8

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