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The Impact of Carbon Emissions Trading on the Total Factor Productivity of China’s Electric Power Enterprises—An Empirical Analysis Based on the Differences-in-Differences Model

Author

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  • Gezi Chen

    (Business School, Central South University, No. 932 Lushan South Road, Yuelu District, Changsha 410083, China)

  • Zhenhua Hu

    (Business School, Central South University, No. 932 Lushan South Road, Yuelu District, Changsha 410083, China)

  • Shijin Xiang

    (Humanities School, Central South University, No. 932 Lushan South Road, Yuelu District, Changsha 410083, China)

  • Ailan Xu

    (Finance Department, Central South University, No. 932 Lushan South Road, Yuelu District, Changsha 410083, China)

Abstract

Based on the panel data of China’s listed electric power enterprises, this paper adopts the differences-in-differences model to empirically analyze the pilot policy of carbon emissions trading’s impact on the total factor productivity of power enterprises in 2013. The study finds that the carbon trading pilot policy has a significant positive effect on the total factor productivity of power companies, and the two possible impact mechanisms are external cost compensation and additional income, and internal low-carbon technology innovation and resource allocation optimization. The conclusions above have been further confirmed by the parallel trend test and robustness test. The heterogeneity analysis demonstrates that there are differences in the regression results between state-owned enterprises and nonstate-owned enterprises. The possible reason is that state-owned enterprises are more likely to be affected by the carbon emissions trading system, and their asset-heavy model puts greater pressure on carbon emission reduction. Therefore, their demand for low-carbon technology innovation is more urgent; areas with stricter carbon emission verification are more sensitive to the implementation of carbon trading, and a reasonable increase in carbon verification can make the carbon trading market more effective. Based on the research results, this paper proposes to speed up the improvement of the national carbon trading market system, enhance the diversity and richness of the main market, improve the liquidity of the carbon trading market, broaden financing channels for electric power enterprises, and improve the carbon market supervision mechanism.

Suggested Citation

  • Gezi Chen & Zhenhua Hu & Shijin Xiang & Ailan Xu, 2024. "The Impact of Carbon Emissions Trading on the Total Factor Productivity of China’s Electric Power Enterprises—An Empirical Analysis Based on the Differences-in-Differences Model," Sustainability, MDPI, vol. 16(7), pages 1-17, March.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:7:p:2832-:d:1365888
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    References listed on IDEAS

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    1. Shahiduzzaman, Md & Layton, Allan, 2017. "Decomposition analysis for assessing the United States 2025 emissions target: How big is the challenge?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 372-383.
    2. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    3. Springer, Cecilia & Evans, Sam & Lin, Jiang & Roland-Holst, David, 2019. "Low carbon growth in China: The role of emissions trading in a transitioning economy," Applied Energy, Elsevier, vol. 235(C), pages 1118-1125.
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    Cited by:

    1. Xiang Li & Yuzhuo Huang & Ken’ichi Matsumoto, 2024. "Assessing the Effectiveness of Market-Oriented Environmental Policies on CO 2 Emissions from Household Consumption: Evidence from a Quasi-Natural Experiment in Carbon Trading Pilots," Sustainability, MDPI, vol. 16(22), pages 1-25, November.
    2. Florentina Paraschiv & Hannah Schmid & Marten Schmitz & Vivian Dünwald & Emma Groos, 2024. "The Interplay Between China’s Regulated and Voluntary Carbon Markets and Its Influence on Renewable Energy Development—A Literature Review," Energies, MDPI, vol. 17(22), pages 1-23, November.

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