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Spatial effects of the market-based energy allocation on energy efficiency: A quasi-natural experiment of energy quota trading

Author

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  • Du, Minzhe
  • Wu, Fenger
  • Luo, Lichun
  • Wang, Qiya
  • Liao, Liping

Abstract

Energy quota trading (EQT) based on source control enhances energy efficiency and green development by optimizing resource allocation. Considering EQT as a quasi-natural experiment, this study adopts a difference-in-differences approach with the spatial Durbin model (SDM-DID) to investigate the impact of EQT on energy efficiency and its spatial effects by using the city-level panel data from 2006 to 2020 in China. Also, a difference-in-difference-in-differences approach with the spatial Durbin model (SDM-DDD) model is employed to explore the mechanisms of these effects from the perspective of marketization, energy allocation efficiency, and green taxation. The results indicate that EQT effectively enhances energy efficiency in the pilot regions compared to the non-pilot regions. Simultaneously, it has a spatial spillover effect that positively impacts energy efficiency in neighboring regions. These effects are particularly pronounced in southern region, old industrial bases, resource-based cities and large cities. Furthermore, the mechanistic test shows that EQT is to achieve the policy effect of enhancing energy use efficiency through channels such as increasing the marketization degree, energy allocation efficiency, and green taxation. The findings of this study shed new insights into the machinations of EQT realization based on market mechanisms and policy instruments for effectively achieving total energy control.

Suggested Citation

  • Du, Minzhe & Wu, Fenger & Luo, Lichun & Wang, Qiya & Liao, Liping, 2025. "Spatial effects of the market-based energy allocation on energy efficiency: A quasi-natural experiment of energy quota trading," Energy, Elsevier, vol. 318(C).
    • Handle: RePEc:eee:energy:v:318:y:2025:i:c:s0360544225005444
    DOI: 10.1016/j.energy.2025.134902
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