IDEAS home Printed from https://ideas.repec.org/a/gam/jijerp/v20y2023i5p4421-d1084956.html
   My bibliography  Save this article

Does China’s Carbon Trading Pilot Policy Reduce Carbon Emissions? Empirical Analysis from 285 Cities

Author

Listed:
  • Xuehui Yang

    (School of Business, Jinggangshan University, Ji’an 343009, China)

  • Jiaping Zhang

    (School of Public Administration, Faculty of Economics and Management, East China Normal University, Shanghai 200062, China)

  • Lehua Bi

    (School of Economics, Guangxi University, Nanning 530004, China
    Xingjian School of Science & Liberal Arts, Guangxi University, Nanning 530004, China)

  • Yiming Jiang

    (School of Business, Jinggangshan University, Ji’an 343009, China)

Abstract

This article studies the influence of the Carbon Trading Pilot Policy (CTPP) on carbon emissions by constructing the balanced panel data from 2003 to 2020 for 285 cities in China above the prefecture level. Difference-in-Difference (DID) method is used to test the influence and the mechanism. (1) The findings suggested that CTPP has dramatically reduced China’s carbon emissions by 6.21%. The parallel trend test shows that the premise of DID is reliable. (2) A variety of robustness tests, such as the instrumental variable method for endogeneity, Propensity Score Matching (PSM) for sample selection bias, variable substitution, time–bandwidth change, and exclusion of policy intervention, show that the conclusion is still robust. (3) The mediation mechanism test indicates that CTPP can promote the reduction in carbon emissions by promoting Green Consumption Transformation (GCT), improving Ecological Efficiency (EE), and promoting Industrial Structure Upgrading (ISU). GCT contributes the most, followed by EE and ISU. (4) The analysis of the heterogeneity reveals that CTPP has a greater effect on carbon emission reduction in central and peripheral cities in China. This study provides policy implications for China and similar developing countries in the face of carbon reduction.

Suggested Citation

  • Xuehui Yang & Jiaping Zhang & Lehua Bi & Yiming Jiang, 2023. "Does China’s Carbon Trading Pilot Policy Reduce Carbon Emissions? Empirical Analysis from 285 Cities," IJERPH, MDPI, vol. 20(5), pages 1-24, March.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:5:p:4421-:d:1084956
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1660-4601/20/5/4421/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1660-4601/20/5/4421/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Beibei Yue & Guanghua Sheng & Shengxiang She & Jiaqi Xu, 2020. "Impact of Consumer Environmental Responsibility on Green Consumption Behavior in China: The Role of Environmental Concern and Price Sensitivity," Sustainability, MDPI, vol. 12(5), pages 1-16, March.
    2. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    3. Brock, William A. & Taylor, M. Scott, 2005. "Economic Growth and the Environment: A Review of Theory and Empirics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 28, pages 1749-1821, Elsevier.
    4. Zhou, Bo & Zhang, Cheng & Wang, Qunwei & Zhou, Dequn, 2020. "Does emission trading lead to carbon leakage in China? Direction and channel identifications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    5. Daniela Marconi, 2012. "Environmental Regulation and Revealed Comparative Advantages in Europe: Is China a Pollution Haven?," Review of International Economics, Wiley Blackwell, vol. 20(3), pages 616-635, August.
    6. Qiuyue Xia & Lu Li & Jie Dong & Bin Zhang, 2021. "Reduction Effect and Mechanism Analysis of Carbon Trading Policy on Carbon Emissions from Land Use," Sustainability, MDPI, vol. 13(17), pages 1-22, August.
    7. Zhang, Wei & Li, Jing & Li, Guoxiang & Guo, Shucen, 2020. "Emission reduction effect and carbon market efficiency of carbon emissions trading policy in China," Energy, Elsevier, vol. 196(C).
    8. Guiliang Tian & Suwan Yu & Zheng Wu & Qing Xia, 2022. "Study on the Emission Reduction Effect and Spatial Difference of Carbon Emission Trading Policy in China," Energies, MDPI, vol. 15(5), pages 1-20, March.
    9. Jonah B. Gelbach, 2016. "When Do Covariates Matter? And Which Ones, and How Much?," Journal of Labor Economics, University of Chicago Press, vol. 34(2), pages 509-543.
    10. Max Freidin & Dmitry Burakov, 2018. "Economic Growth, Electricity Consumption and Internet Usage Nexus: Evidence from a Panel of Commonwealth of Independent States," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 267-272.
    11. Hong, Qianqian & Cui, Linhao & Hong, Penghui, 2022. "The impact of carbon emissions trading on energy efficiency: Evidence from quasi-experiment in China's carbon emissions trading pilot," Energy Economics, Elsevier, vol. 110(C).
    12. Baek , Jungho & Koo , Won W., 2009. "A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 13(2), pages 87-106, December.
    13. Dissanayake, Sumali & Mahadevan, Renuka & Asafu-Adjaye, John, 2020. "Evaluating the efficiency of carbon emissions policies in a large emitting developing country," Energy Policy, Elsevier, vol. 136(C).
    14. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
    15. Zhang, Fan & Deng, Xiangzheng & Phillips, Fred & Fang, Chuanglin & Wang, Chao, 2020. "Impacts of industrial structure and technical progress on carbon emission intensity: Evidence from 281 cities in China," Technological Forecasting and Social Change, Elsevier, vol. 154(C).
    16. Wang, Yafei & Liao, Meng & Wang, Yafei & Xu, Lixiao & Malik, Arunima, 2021. "The impact of foreign direct investment on China's carbon emissions through energy intensity and emissions trading system," Energy Economics, Elsevier, vol. 97(C).
    17. Hering, Laura & Poncet, Sandra, 2014. "Environmental policy and exports: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 296-318.
    18. Hua Wang & Yanhong Jin, 2007. "Industrial Ownership and Environmental Performance: Evidence from China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(3), pages 255-273, March.
    19. Hettige, Hemamala & Mani, Muthukumara & Wheeler, David, 2000. "Industrial pollution in economic development: the environmental Kuznets curve revisited," Journal of Development Economics, Elsevier, vol. 62(2), pages 445-476, August.
    20. James Heckman & Rodrigo Pinto & Peter Savelyev, 2013. "Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes," American Economic Review, American Economic Association, vol. 103(6), pages 2052-2086, October.
    21. Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 360-394, August.
    22. Chiu, Fan-Ping & Kuo, Hsiao-I. & Chen, Chi-Chung & Hsu, Chia-Sheng, 2015. "The energy price equivalence of carbon taxes and emissions trading—Theory and evidence," Applied Energy, Elsevier, vol. 160(C), pages 164-171.
    23. Liu, Yunqiang & Liu, Sha & Shao, Xiaoyu & He, Yanqiu, 2022. "Policy spillover effect and action mechanism for environmental rights trading on green innovation: Evidence from China's carbon emissions trading policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    24. Finon, Dominique, 2019. "Carbon policy in developing countries: Giving priority to non-price instruments," Energy Policy, Elsevier, vol. 132(C), pages 38-43.
    25. Shao-Zhou Qi & Chao-Bo Zhou & Kai Li & Si-Yan Tang, 2021. "Influence of a pilot carbon trading policy on enterprises’ low-carbon innovation in China," Climate Policy, Taylor & Francis Journals, vol. 21(3), pages 318-336, March.
    26. Chen, Xing & Lin, Boqiang, 2021. "Towards carbon neutrality by implementing carbon emissions trading scheme: Policy evaluation in China," Energy Policy, Elsevier, vol. 157(C).
    27. Runde Gu & Chunfa Li & Dongdong Li & Yangyang Yang & Shan Gu, 2022. "The Impact of Rationalization and Upgrading of Industrial Structure on Carbon Emissions in the Beijing-Tianjin-Hebei Urban Agglomeration," IJERPH, MDPI, vol. 19(13), pages 1-16, June.
    28. Albrizio, Silvia & Kozluk, Tomasz & Zipperer, Vera, 2017. "Environmental policies and productivity growth: Evidence across industries and firms," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 209-226.
    29. Thomas Stoerk & Daniel J. Dudek & Jia Yang, 2019. "China’s national carbon emissions trading scheme: lessons from the pilot emission trading schemes, academic literature, and known policy details," Climate Policy, Taylor & Francis Journals, vol. 19(4), pages 472-486, April.
    30. Cheng, Beibei & Dai, Hancheng & Wang, Peng & Xie, Yang & Chen, Li & Zhao, Daiqing & Masui, Toshihiko, 2016. "Impacts of low-carbon power policy on carbon mitigation in Guangdong Province, China," Energy Policy, Elsevier, vol. 88(C), pages 515-527.
    31. Qin-Lei Jing & Han-Zhen Liu & Wei-Qing Yu & Xu He, 2022. "The Impact of Public Transportation on Carbon Emissions—From the Perspective of Energy Consumption," Sustainability, MDPI, vol. 14(10), pages 1-18, May.
    32. Cenjie Liu & Chunbo Ma & Rui Xie, 2020. "Structural, Innovation and Efficiency Effects of Environmental Regulation: Evidence from China’s Carbon Emissions Trading Pilot," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 741-768, April.
    33. Hu, Yucai & Ren, Shenggang & Wang, Yangjie & Chen, Xiaohong, 2020. "Can carbon emission trading scheme achieve energy conservation and emission reduction? Evidence from the industrial sector in China," Energy Economics, Elsevier, vol. 85(C).
    34. Zhaoyang Zhao & Shuning Zhou & Siying Wang & Chong Ye & Tuolei Wu, 2022. "The Impact of Carbon Emissions Trading Pilot Policy on Industrial Structure Upgrading," Sustainability, MDPI, vol. 14(17), pages 1-25, August.
    35. Chen, Nengcheng & Xu, Lei & Chen, Zeqiang, 2017. "Environmental efficiency analysis of the Yangtze River Economic Zone using super efficiency data envelopment analysis (SEDEA) and tobit models," Energy, Elsevier, vol. 134(C), pages 659-671.
    36. Szu‐Tung Lin & Han‐Jen Niu, 2018. "Green consumption: Environmental knowledge, environmental consciousness, social norms, and purchasing behavior," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1679-1688, December.
    37. Alfredsson, E.C., 2004. "“Green” consumption—no solution for climate change," Energy, Elsevier, vol. 29(4), pages 513-524.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feng Liu & Yu Fu & Weiguo Wang, 2023. "Heterogeneous Effects of China’s Carbon Market on Carbon Emissions—Evidence from a Regression Control Method," Sustainability, MDPI, vol. 16(1), pages 1-20, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Xinhua & Zhang, Qianqian & Dai, Zhifeng & Zhang, Xiaotong, 2023. "The impact of carbon markets on the financial performance of power producers: Evidence based on China," Energy Economics, Elsevier, vol. 127(PA).
    2. Susheng Wang & Gang Chen & Xue Han, 2021. "An Analysis of the Impact of the Emissions Trading System on the Green Total Factor Productivity Based on the Spatial Difference-in-Differences Approach: The Case of China," IJERPH, MDPI, vol. 18(17), pages 1-18, August.
    3. Weng, Zhixiong & Liu, Tingting & Wu, Yufeng & Cheng, Cuiyun, 2022. "Air quality improvement effect and future contributions of carbon trading pilot programs in China," Energy Policy, Elsevier, vol. 170(C).
    4. Wu, Rongxin & Tan, Zhizhou & Lin, Boqiang, 2023. "Does carbon emission trading scheme really improve the CO2 emission efficiency? Evidence from China's iron and steel industry," Energy, Elsevier, vol. 277(C).
    5. Lai, Aolin & Wang, Qunwei & Cui, Lianbiao, 2022. "Can market segmentation lead to green paradox? Evidence from China," Energy, Elsevier, vol. 254(PC).
    6. Li, Rui & Fang, Debin & Xu, Jiajun, 2024. "Does China's carbon inclusion policy promote household carbon emissions reduction? Theoretical mechanisms and empirical evidence," Energy Economics, Elsevier, vol. 132(C).
    7. Gao, Kang & Yuan, Yijun, 2021. "The effect of innovation-driven development on pollution reduction: Empirical evidence from a quasi-natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    8. Tan, Xiujie & Sun, Qian & Wang, Meiji & Se Cheong, Tsun & Yan Shum, Wai & Huang, Jinpeng, 2022. "Assessing the effects of emissions trading systems on energy consumption and energy mix," Applied Energy, Elsevier, vol. 310(C).
    9. Zhang, Jiekuan, 2023. "Emissions trading scheme and energy consumption and output structure: Evidence from China," Renewable Energy, Elsevier, vol. 219(P1).
    10. Yuping Deng & Yanrui Wu & Helian Xu, 2019. "Environmental Regulation and Export Product Quality: Evidence from Chinese Firms," Economics Discussion / Working Papers 19-14, The University of Western Australia, Department of Economics.
    11. Maogang Tang & Silu Cheng & Wenqing Guo & Weibiao Ma & Fengxia Hu, 2023. "Relationship between carbon emission trading schemes and companies’ total factor productivity: evidence from listed companies in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11735-11767, October.
    12. Gao, Ming, 2023. "The impacts of carbon trading policy on China's low-carbon economy based on county-level perspectives," Energy Policy, Elsevier, vol. 175(C).
    13. Niu, Xiaoyan & Zhang, Yuwen & Li, Baoqi & Chen, Zhenling & Ni, Guohua & Lyu, Ning, 2024. "How does carbon emission trading scheme affect enterprise market value? A roadmap towards natural resources sustainability," Resources Policy, Elsevier, vol. 88(C).
    14. Song, Xiang & Wang, Dingyu & Zhang, Xuantao & He, Yuan & Wang, Yong, 2022. "A comparison of the operation of China's carbon trading market and energy market and their spillover effects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    15. Shujing Yue & Yang Yang & Yaoyu Hu, 2016. "Does Foreign Direct Investment Affect Green Growth? Evidence from China’s Experience," Sustainability, MDPI, vol. 8(2), pages 1-14, February.
    16. Gu, Guangtong & Zheng, Haorong & Tong, Lingyun & Dai, Yaxian, 2022. "Does carbon financial market as an environmental regulation policy tool promote regional energy conservation and emission reduction? Empirical evidence from China," Energy Policy, Elsevier, vol. 163(C).
    17. Yan Xiao & Yan Zhang & Jiekuan Zhang, 2023. "The Impact of Carbon Emission Trading on Industrial Green Total Factor Productivity," Sustainability, MDPI, vol. 15(7), pages 1-18, April.
    18. Sun, Yanming & Shen, Simiao & Zhou, Chuanyu, 2023. "Does the pilot emissions trading system in China promote innovation? Evidence based on green technology innovation in the energy sector," Energy Economics, Elsevier, vol. 126(C).
    19. Yang, Zhenbing & Shi, Qingquan & Lv, Xiangqiu & Shi, Qi, 2022. "Heterogeneous low-carbon targets and energy structure optimization: Does stricter carbon regulation really matter?," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 329-343.
    20. Judith M. Dean & Mary E. Lovely & Hua Wang, 2017. "Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 9, pages 155-167, World Scientific Publishing Co. Pte. Ltd..

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijerp:v:20:y:2023:i:5:p:4421-:d:1084956. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.