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Carbon emissions trading and corporate energy efficiency: Evidence from a quasi-natural experiment in China

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  • Liu, Guanchun
  • Zhang, Gaorong
  • Song, Malin
  • Fu, Shun

Abstract

To examine the impact of carbon emissions trading (CET) on corporate energy efficiency, this study exploits China's CET pilot as a quasi-experiment and runs a staggered difference-in-differences regression. Using the annual data between 2007 and 2022 for China's listed firms, we find that CET significantly promotes energy efficiency in firms located in pilot regions, and this finding remains when accounting for treatment effect heterogeneity. Moreover, the positive impact on energy efficiency is more pronounced for firms belonging to high-pollution industries, with private ownership and greater governance quality, as those located in regions with higher carbon trading prices, greater environmental regulation intensity and higher levels of marketization. Further mechanism tests reveal that the positive energy efficiency effect works through increasing green innovation, optimizing resource allocation and attracting green investors. Additionally, CET boosts corporate operational performance, promotes investment activities and expands employment. Overall, our findings confirm the active role of CET in achieving the environment-friendly growth regime in China.

Suggested Citation

  • Liu, Guanchun & Zhang, Gaorong & Song, Malin & Fu, Shun, 2025. "Carbon emissions trading and corporate energy efficiency: Evidence from a quasi-natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 212(C).
    • Handle: RePEc:eee:tefoso:v:212:y:2025:i:c:s0040162524007571
    DOI: 10.1016/j.techfore.2024.123959
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    Keywords

    Carbon emissions trading; Energy efficiency; Staggered difference-in-differences; China;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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