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The effectiveness of China's regional carbon market pilots in reducing firm emissions.
Abstract
China has implemented an emission trading system (ETS) to reduce its ever-increasing
greenhouse gas emissions while maintaining rapid economic growth. With low carbon
prices and infrequent allowance trading, whether China's ETS is an effective approach
for climate mitigation has entered the center of the policy and research debate. Utilizing
China's regional ETS pilots as a quasi-natural experiment, we provide a comprehensive
assessment of the effects of ETS on firm carbon emissions and economic outcomes by
means of a matched difference-in-differences (DID) approach. The empirical analysis
is based on a unique panel dataset of firm tax records in the manufacturing and public
utility sectors during 2009 to 2015. We show unambiguous evidence that the regional
ETS pilots are effective in reducing firm emissions, leading to a 16.7% reduction
in total emissions and a 9.7% reduction in emission intensity. Regulated firms achieve
emission abatement through conserving energy consumption and switching to low-carbon
fuels. The economic consequences of the ETS are mixed. On one hand, the ETS has a
negative impact on employment and capital input; on the other hand, the ETS incentivizes
regulated firms to improve productivity. In the aggregate, the ETS does not exhibit
statistically significant effects on output and export. We also find that the ETS
displays notable heterogeneity across pilots. Mass-based allowance allocation rules,
higher carbon prices, and active allowance trading contribute to more pronounced effects
in emission abatement.
Type
Journal articlePermalink
https://hdl.handle.net/10161/24198Published Version (Please cite this version)
10.1073/pnas.2109912118Publication Info
Cui, Jingbo; Wang, Chunhua; Zhang, Junjie; & Zheng, Yang (2021). The effectiveness of China's regional carbon market pilots in reducing firm emissions.
Proceedings of the National Academy of Sciences of the United States of America, 118(52). pp. e2109912118-e2109912118. 10.1073/pnas.2109912118. Retrieved from https://hdl.handle.net/10161/24198.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Show full item recordScholars@Duke
Jingbo Cui
Associate Professor of Applied Economics at Duke Kunshan University
Bio: Dr. Jingbo Cui is an Associate Professor of Applied Economics at the Division
of Social Sciences and Environmental Research Center at Duke Kunshan University. Before
the current position, he was a Chu-Tian Junior Scholar from the Department of Education
in Hubei Province, an associate professor at the School of Economics and Management
at Wuhan University, a post-doctoral research associate, and visiting scholar at Iowa
State University. He holds a Ph.D. in economics fro
Junjie Zhang
Professor in the Environmental Sciences and Policy Division
Junjie Zhang is a professor in the Nicholas School of the Environment at Duke University
and Director of the Initiative for Sustainable Investment at Duke Kunshan University.
He founded and directed Duke Kunshan's Environmental Research Center and International
Master of Environmental Policy Program. Before that, he was an associate professor
in the School of Global Policy and Strategy at the University of California, San Diego.
He was also a Volkswagen Visiting Chair in Sustainability in Sch
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