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The Effect of Energy Quota Trading on Energy Saving in China: Insight from a Quasi-Natural Experiment

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  • Liping Liao

    (School of Public Finance and Taxation, Guangdong University of Finance and Economics, Guangzhou 510320, China)

  • Chukun Huang

    (School of Economics and Management, South China Normal University, Guangzhou 510006, China)

  • Minzhe Du

    (School of Economics and Management, South China Normal University, Guangzhou 510006, China)

Abstract

Saving energy is an important strategy to address the current energy crisis and environmental degradation. Regarding the pilot policy of the energy quota trading as a quasi-natural experiment by employing a difference-in-differences method, the purpose of this paper is to investigate the effect of this pilot policy on energy saving and its mechanisms based on city-level data in China from 2006 to 2020. We find that the energy quota trading policy can reduce the total energy consumption and energy consumption intensity of pilot cities, and the effect of the policy can gradually strengthen over time. The market-oriented reform of energy factor allocation can effectively promote energy saving and economic growth. These results are convincing through a series of robustness checks. The heterogeneity test shows that the energy quota trading has a significant energy saving effect on economically developed cities, densely populated cities and southern cities, but not in economically underdeveloped cities, sparsely populated cities and northern cities. Further mechanism inspection suggests that the pilot policy of energy quota trading mainly achieves energy conservation through industrial structure upgrading and green technology innovation. Our findings provide a valuable insight for China to control energy consumption and promote the high-quality development of the energy economy.

Suggested Citation

  • Liping Liao & Chukun Huang & Minzhe Du, 2022. "The Effect of Energy Quota Trading on Energy Saving in China: Insight from a Quasi-Natural Experiment," Energies, MDPI, vol. 15(22), pages 1-17, November.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:22:p:8610-:d:975258
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