Energy use rights trading policy and energy consumption?

Over the years, China’s extensive economic growth model has positioned the country as a major consumer of energy, posing significant challenges to sustainable development. In response, the Chinese government has made numerous efforts to limit energy intensity and reduce dependence on energy resources. The energy use rights trading policy (EURT) is an important attempt by the government to use market mechanisms to reduce energy usage and improve energy efficiency. Using data from 285 cities from 2006 to 2020, this study uses a difference-in-differences (DID) model to evaluate the effect of the EURT policy on energy usage and its underlying mechanisms. The findings revealed that the policy substantially reduced energy usage in pilot regions, which was confirmed through a series of robustness tests. The mechanism analysis further demonstrates that the policy lowers energy usage by promoting green technological innovation and increasing government attention to environmental protection. Additional analysis reveals that the negative impact of the policy on energy usage is significant in regions with fewer industrial enterprises and where local officials are in key phases of political promotion. These findings provide valuable insights for improving the policy and offer empirical evidence to support the expansion of pilot programs.