How does carbon emissions trading affect China’s energy intensity?

Donglan Zha, Ting Xu and Mei Wang

Journal of the Asia Pacific Economy, 2025, vol. 30, issue 4, 1303-1327

Abstract: The carbon emissions trading policy should be an essential factor influencing the environment and the economy, and should have a crucial impact on energy intensity. This study analyzed data for 29 regions of China from 2005 to 2020, and applied the synthetic control method to assess the impact of carbon emissions trading on energy intensity. The results show that the carbon trading policy significantly reduced energy intensity in the pilot regions. Specifically, from 2013 to 2020, carbon emissions trading decreased energy intensity in Tianjin, Shanghai, Hubei, and Chongqing by 17.92%, 29.22%, 23.89%, and 16.33%. The results of the mechanism test show that carbon emissions trading reduce energy intensity through technology improvements and industrial structure upgrading.HIGHLIGHTSThe synthetic control method offers the new basis to evaluate the impact of carbon emissions trading on energy intensity.Carbon emissions trading reduce energy intensity through technological innovation and industrial structure upgrading.Distinguish between different types of technologies related to energy intensity, and identify which specific types of technological progress can reduce energy intensity.

Date: 2025
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DOI: 10.1080/13547860.2024.2378533

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