The effectiveness of China's regional carbon market pilots in reducing firm emissions.
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2021-12
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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.
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Cui, Jingbo, Chunhua Wang, Junjie Zhang and Yang Zheng (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.
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Jingbo Cui
Bio: Dr. Jingbo Cui is a tenured Associate Professor of Applied Economics at the Division of Social Sciences, Co-Director at the Environmental Research Center, and Director of Graduate Studies for the International Master of Environmental Policy (iMEP) program at Duke Kunshan University, with a Secondary Faculty Appointment at the Nicholas School of the Environment at Duke University.
Dr. Cui's research centers on Environmental Economics, Climate Innovation, and the Economics of Climate Change and Policy. His recent research leverages causal inference methods, data science algorithms (e.g., LLMs and NLP), and GIS tools to explore topics such as the drivers and obstacles to global climate innovation, the economic and environmental impacts of China's climate policy, and the identification and quantification of the financial consequences of climate risks in China.
His scholarly contributions have been published in top-tier academic journals, including PNAS, AER P&P, Journal of the Association of Environmental and Resource Economists (JAERE), Journal of Environmental Economics and Management (JEEM), American Journal of Agricultural Economics, Environmental and Resource Economics, and others. He has served as a Co-Editor for Weather, Climate and Society under the American Meteorological Society, an Associate Editor for Environment and Development Economics, and a member of the editorial councils at JAERE and JEEM.
His research projects on China's Climate Policy and Climate Innovation have been funded by the NSFC of China. Nature Climate Change Highlight reports and world-leading media, including the Financial Times, Nature News in Focus, BBC Worklife, the South Chian Morning Post, and others, have covered his research and perspectives on climate policy and energy transition.
Junjie Zhang
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 Schwarzman College at Tsinghua University. His recent research focuses on empirical issues in energy transition, climate change, and green finance. He has received funding from various sources, including scientific foundations, multilateral banks, corporations, financial institutions, and philanthropic foundations. He holds a B.S. from the Renmin University of China, a B.S. and an M.S. from Tsinghua University, and a Ph.D. from Duke University.
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