Energy structural change towards net-zero economy: What can we learn from carbon finance initiatives in China?

Abstract

Drawing upon a quasi-natural experiment of the staggered implementation of carbon spot trading pilot and matching China's province macro-database and listed company micro-database, this paper utilizes the staggered difference-in-difference identification strategy to empirically examine the impact of carbon finance on energy structural change and underlying mechanisms. The study indicates that the carbon spot trading pilot policy effectively triggers low-carbon energy structural change, and this conclusion remains valid following a nest of robustness evaluations. The mechanism test demonstrates that the policy drives energy structural change through three plausible paths: optimizing green financing environment, promoting industrial cleanliness transformation, and advancing enterprise green development. The heterogeneity analysis shows that the policy effects are more pronounced in the regions with excellent government environment emphasis, developed marketization level and active public environmental awareness. Further research validates that the policy accomplishes considerable economic benefits while achieving favorable environmental performance. Our study furnishes far-reaching evidence for emerging economies like China to utilize carbon finance initiatives to facilitate energy structural change towards net-zero economy.