Evaluation of the impact of China’s carbon trading pilot policy on carbon reduction and pollution reduction synergy

doi:10.12006/j.issn.1673-1719.2024.133

Abstract

Abstract:

China is currently facing the dual challenge of addressing climate change and achieving the goal of building a Beautiful China. Synergizing pollution reduction and carbon reduction has become an inevitable choice. This study focused on one of the most representative greenhouse gas control policies: the Carbon Emissions Trading Scheme. Based on panel data from 267 prefecture-level cities in China from 2007 to 2017, the carbon emissions trading pilot was regarded as a quasi-natural experiment. A mixed model with a combination of difference-in-differences method and fixed effects was constructed to analyze the effects of the carbon market pilot on carbon emissions reduction and pollution control. The results indicate that the carbon market polit has effectively reduced carbon emissions and decreased carbon intensity in the pilot areas, while also reducing industrial sulfur dioxide emissions and PM_2.5 concentrations. However, it does not have a significant impact on industrial wastewater and industrial particulate matter emissions. In regions with stricter penalty mechanisms and higher fiscal dependence, the synergistic effect of pollution and carbon reduction is more significant. From the perspective of market mechanisms, trading volume, carbon price, and trading days do not have an impact on pollution and carbon reduction.

Key words: Carbon market, Pollutants and carbon reduction, DID (Difference-in-Differences method), Collaborative governance

LI Feng, YAN Yu-Tong, PANG Jun, LU Zhi-Lin. Evaluation of the impact of China’s carbon trading pilot policy on carbon reduction and pollution reduction synergy[J]. Climate Change Research, 2025, 21(1): 102-115.

Figures/Tables 11

Table 1 Separate description of a set of variables

Fig. 1 Total carbon emission changes of pilot area in research period during 2006-2017

Table 2 Effect of carbon market policy on carbon reduction

Table 3 Effect of carbon market policy on pollution reduction (SO2, PM2.5)

Table 4 Effect of carbon market policy on pollution reduction (industrial dust, industrial effluent)

Fig. 2 Test of the parallel trend assumption

Table 5 Results of PSM test

Fig. 3 Empirical cumulative distribution of placebo test coefficient

Table 6 Test of market supervision and regulation

Table 7 Test of administrative intervention

Table 8 Heterogeneity of the effect of carbon price on pollution and carbon reduce

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