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Impacts of Market‐based Environmental Regulation on Green Total Factor Energy Efficiency in China

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  • Ge Li
  • Da Gao
  • Yi Li

Abstract

This study employed a difference‐in‐differences design to assess the effect of market‐based environmental regulation on green total factor energy efficiency (GTFEE) in a quasi‐natural experiment that investigated China's carbon emissions trading scheme (ETS). The empirical results show that ETS had a positive effect on GTFEE. A series of robustness tests revealed that the results were robust. Potential mechanisms through which ETS can improve GTFEE include the promotion of technological innovation and the upgrading of industrial structure. The positive effects varied in different cities and different regions – the result was pronounced in eastern China and developed cities, but it was insignificant in central and western areas and developing cities. This study confirms the satisfactory performance of China's ETS in improving GTFEE, and this is relevant for other emerging countries.

Suggested Citation

  • Ge Li & Da Gao & Yi Li, 2023. "Impacts of Market‐based Environmental Regulation on Green Total Factor Energy Efficiency in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(3), pages 92-114, May.
    • Handle: RePEc:bla:chinae:v:31:y:2023:i:3:p:92-114
    DOI: 10.1111/cwe.12485
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    References listed on IDEAS

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    Cited by:

    1. Yang, Zhijiu & Duan, Jiani & Fan, Niuniu, 2024. "Towards carbon neutrality: The decoupling effect of industrial restructuring and non-fossil energy substitution on carbon emissions," Energy, Elsevier, vol. 308(C).

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