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Effect of the Emissions Trading Scheme on CO 2 Abatement in China

Author

Listed:
  • Qian Wang

    (School of Economics, Jilin University, Changchun 130012, China
    Public Sector Research Center, Jilin University, Changchun 130012, China)

  • Cuiyun Gao

    (School of Economics, Liaoning University, Shenyang 110136, China)

  • Shuanping Dai

    (N-EAST School of Advanced Studies, and Mercator School of Management, University of Duisburg-Essen, 47057 Duisburg, Germany)

Abstract

This article takes advantage of the pilot Emissions Trading Scheme (ETS) project to estimate the causal impact of the ETS on CO 2 abatement in China. The CO 2 emissions and CO 2 intensities of each province are calculated by using the fossil fuel data of 30 provincial administration regions from 2006 to 2016. Then difference in difference (DiD) models and propensity score matching (PSM) with panel data are applied to estimate the causal impact of the pilot ETS project. Results show that the pilot regions reduce their CO 2 emissions and intensities more than the non-pilot regions under the pilot ETS project. The pilot ETS project significantly induced 12% decreases in the nominal CO 2 intensity and 7.6% decrease in the real CO 2 intensity, after controlling for regional heterogeneity, but its reduction effects on CO 2 emissions are insignificant. Decreasing the proportion of coal to total energy consumption may be the main channel of the pilot ETS project inducing CO 2 abatement. The estimated results for control variables indicate that upgrading industrial structures, attracting FDI, and purifying the export structure have significant effects on CO 2 abatement.

Suggested Citation

  • Qian Wang & Cuiyun Gao & Shuanping Dai, 2019. "Effect of the Emissions Trading Scheme on CO 2 Abatement in China," Sustainability, MDPI, vol. 11(4), pages 1-13, February.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:4:p:1055-:d:206824
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