IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i1p466-d1313411.html
   My bibliography  Save this article

Does the Energy-Consumption Permit Trading Scheme Improve Carbon Emission Performance? Evidence from a Quasi-Natural Experiment in China

Author

Listed:
  • Qi He

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Hongli Jiang

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

Abstract

The Chinese government launched the Energy-Consumption Permit Trading Scheme (ECPT) in 2016 as a pilot policy initiative to achieve energy conservation and emissions reduction goals. To generate a quasi-natural experiment, this study used a difference-in-differences (DID) approach with panel data from 2006 to 2020 in China. The goal was to explore the impact of the ECPT policy on the carbon emission performance (CEP) as well as analyze the underlying influence processes. The findings indicate that applying the ECPT has a considerable positive influence on the CEP. In comparison to provinces that did not engage in the pilot program, those that did reported a 4.5% improvement in CEP. We can safely declare that the results remain consistent and trustworthy after undergoing a battery of rigorous tests to assess the robustness of our findings. The mechanism’s evaluation revealed that the ECPT has the potential to improve the CEP, mostly via changing energy consumption patterns and stimulating technological innovation. Furthermore, when we considered heterogeneity, we discovered that factors such as geographical location, the level of green financing development, and the level of environmental regulation may affect the ECPT policy effects.

Suggested Citation

  • Qi He & Hongli Jiang, 2024. "Does the Energy-Consumption Permit Trading Scheme Improve Carbon Emission Performance? Evidence from a Quasi-Natural Experiment in China," Sustainability, MDPI, vol. 16(1), pages 1-27, January.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:1:p:466-:d:1313411
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/1/466/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/1/466/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhang, Ning & Choi, Yongrok, 2013. "Total-factor carbon emission performance of fossil fuel power plants in China: A metafrontier non-radial Malmquist index analysis," Energy Economics, Elsevier, vol. 40(C), pages 549-559.
    2. Yang, Zhenbing & Shao, Shuai & Xu, Lili & Yang, Lili, 2022. "Can regional development plans promote economic growth? City-level evidence from China," Socio-Economic Planning Sciences, Elsevier, vol. 83(C).
    3. Fang, Guochang & Gao, Zhengye & Tian, Lixin & Fu, Min, 2022. "What drives urban carbon emission efficiency? – Spatial analysis based on nighttime light data," Applied Energy, Elsevier, vol. 312(C).
    4. Zhang, Yanfang & Wei, Jinpeng & Gao, Qi & Shi, Xunpeng & Zhou, Dequn, 2022. "Coordination between the energy-consumption permit trading scheme and carbon emissions trading: Evidence from China," Energy Economics, Elsevier, vol. 116(C).
    5. Zhang, Yanfang & Gao, Qi & Wei, Jinpeng & Shi, Xunpeng & Zhou, Dequn, 2023. "Can China's energy-consumption permit trading scheme achieve the “Porter” effect? Evidence from an estimated DSGE model," Energy Policy, Elsevier, vol. 180(C).
    6. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
    7. Zhang, Yanfang & Guo, Siyuan & Shi, Xunpeng & Qian, Xiangyan & Nie, Rui, 2021. "A market instrument to achieve carbon neutrality: Is China’s energy-consumption permit trading scheme effective?," Applied Energy, Elsevier, vol. 299(C).
    8. 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).
    9. Ma, Guangcheng & Qin, Jiahong & Zhang, Yumeng, 2023. "Does the carbon emissions trading system reduce carbon emissions by promoting two-way FDI in developing countries? Evidence from Chinese listed companies and cities," Energy Economics, Elsevier, vol. 120(C).
    10. Wang, Jiaqi & Tian, Jiaxin & Kang, Yuxin & Guo, Kun, 2023. "Can green finance development abate carbon emissions: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 73-91.
    11. Wei, Hao & Zhou, Yaru, 2023. "The impact of international talent on environmental pollution: Firm-level evidence from China," Energy Economics, Elsevier, vol. 125(C).
    12. Du, Minzhe & Wu, Fenger & Ye, Danfeng & Zhao, Yating & Liao, Liping, 2023. "Exploring the effects of energy quota trading policy on carbon emission efficiency: Quasi-experimental evidence from China," Energy Economics, Elsevier, vol. 124(C).
    13. Franzò, Simone & Frattini, Federico & Cagno, Enrico & Trianni, Andrea, 2019. "A multi-stakeholder analysis of the economic efficiency of industrial energy efficiency policies: Empirical evidence from ten years of the Italian White Certificate Scheme," Applied Energy, Elsevier, vol. 240(C), pages 424-435.
    14. Yi, Jinchao & Hou, Yilin & Zhang, Zach Ziye, 2023. "The impact of foreign direct investment (FDI) on China's manufacturing carbon emissions," Innovation and Green Development, Elsevier, vol. 2(4).
    15. Zhou, P. & Ang, B.W. & Han, J.Y., 2010. "Total factor carbon emission performance: A Malmquist index analysis," Energy Economics, Elsevier, vol. 32(1), pages 194-201, January.
    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. Gao, Yuxin & Gao, Ming, 2024. "Did China's energy consumption permit trading scheme improve green economic efficiency? Prefecture-level evidence from China," Energy, Elsevier, vol. 308(C).

    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. Zheng, Qingying & Hu, Haoyang & Li, Jianglong, 2024. "Enterprise decision-making in energy use rights trading market: A theoretical and simulation study," Energy Policy, Elsevier, vol. 193(C).
    2. Xiao, Huijuan & Wang, Daoping & Qi, Yu & Shao, Shuai & Zhou, Ya & Shan, Yuli, 2021. "The governance-production nexus of eco-efficiency in Chinese resource-based cities: A two-stage network DEA approach," Energy Economics, Elsevier, vol. 101(C).
    3. Zhang, Yanfang & Gao, Qi & Wei, Jinpeng & Shi, Xunpeng & Zhou, Dequn, 2023. "Can China's energy-consumption permit trading scheme achieve the “Porter” effect? Evidence from an estimated DSGE model," Energy Policy, Elsevier, vol. 180(C).
    4. Ding, Li-Li & Lei, Liang & Zhao, Xin & Calin, Adrian Cantemir, 2020. "Modelling energy and carbon emission performance: A constrained performance index measure," Energy, Elsevier, vol. 197(C).
    5. Cheng, Zhonghua & Li, Lianshui & Liu, Jun & Zhang, Huiming, 2018. "Total-factor carbon emission efficiency of China's provincial industrial sector and its dynamic evolution," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 330-339.
    6. Jianglong Li & Boqiang Lin, 2016. "Green Economy Performance and Green Productivity Growth in China’s Cities: Measures and Policy Implication," Sustainability, MDPI, vol. 8(9), pages 1-21, September.
    7. Duan, Na & Guo, Jun-Peng & Xie, Bai-Chen, 2016. "Is there a difference between the energy and CO2 emission performance for China’s thermal power industry? A bootstrapped directional distance function approach," Applied Energy, Elsevier, vol. 162(C), pages 1552-1563.
    8. Lin, Boqiang & Sai, Rockson, 2021. "A multi factor Malmquist CO2emission performance indices: Evidence from Sub Saharan African public thermal power plants," Energy, Elsevier, vol. 223(C).
    9. 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).
    10. Yao, Xin & Guo, Chengwen & Shao, Shuai & Jiang, Zhujun, 2016. "Total-factor CO2 emission performance of China’s provincial industrial sector: A meta-frontier non-radial Malmquist index approach," Applied Energy, Elsevier, vol. 184(C), pages 1142-1153.
    11. Zhang, Ning & Zhou, Peng & Kung, Chih-Chun, 2015. "Total-factor carbon emission performance of the Chinese transportation industry: A bootstrapped non-radial Malmquist index analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 584-593.
    12. Yu Liu & Rui-tang Guo & Wei-guo Pan, 2024. "Evaluation of carbon emission efficiency and spatial relevance in the thermal power industry: evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 22715-22745, September.
    13. Yu, Dejian & He, Xiaorong, 2020. "A bibliometric study for DEA applied to energy efficiency: Trends and future challenges," Applied Energy, Elsevier, vol. 268(C).
    14. Zhang, Ning & Kong, Fanbin & Choi, Yongrok & Zhou, P., 2014. "The effect of size-control policy on unified energy and carbon efficiency for Chinese fossil fuel power plants," Energy Policy, Elsevier, vol. 70(C), pages 193-200.
    15. Wang, Zhaohua & Feng, Chao, 2015. "Sources of production inefficiency and productivity growth in China: A global data envelopment analysis," Energy Economics, Elsevier, vol. 49(C), pages 380-389.
    16. Lin, Boqiang & Sai, Rockson, 2022. "Towards low carbon economy: Performance of electricity generation and emission reduction potential in Africa," Energy, Elsevier, vol. 251(C).
    17. Ke Wang & Yujiao Xian & Yi-Ming Wei & Zhimin Huang, 2016. "Sources of carbon productivity change: A decomposition and disaggregation analysis based on global Luenberger productivity indicator and endogenous directional distance function," CEEP-BIT Working Papers 91, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
    18. Du, Limin & Mao, Jie, 2015. "Estimating the environmental efficiency and marginal CO2 abatement cost of coal-fired power plants in China," Energy Policy, Elsevier, vol. 85(C), pages 347-356.
    19. Wu, Xueping & Qiu, Wenhai, 2024. "Carbon decoupling effects of energy consumption permit trading schemes: Evidence from China," Energy, Elsevier, vol. 307(C).
    20. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.

    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:jsusta:v:16:y:2024:i:1:p:466-:d:1313411. 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.