Empirical analysis of the impact of China’s carbon emissions trading policy using provincial-level data

Abstract

Investigating the impact of carbon emissions trading policy and elucidating the underlying mechanisms are crucial for enhancing policy effectiveness and refining related systems. This study examines the impact of carbon emissions trading policy by constructing a difference-in-difference model utilizing unbalanced panel data from China’s provinces spanning the period from 2005 to 2019. Additionally, a mediating effect model is employed to delve into the underlying mechanisms. The key findings are as follows: Firstly, the implementation of carbon emissions trading policy has a notable inhibitory impact on carbon emissions. Secondly, both the upgrading of industrial structure and the reduction of energy intensity play mediating roles in carbon emissions reduction. However, the development of clean energy industries does not exhibit a significant mediating effect. In conclusion, this study offers policy recommendations aimed at facilitating carbon reduction. These include enhancing the market-based trading mechanism for carbon emissions, optimizing and upgrading industrial structures, fostering innovation in green and low-carbon technologies, and promoting the development and utilization of clean energy.