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Carbon emission trading policy and energy transition: Perspective from natural gas consumption in China

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  • Cai, Lifeng
  • Du, Anna Min
  • Du, Qunyang
  • Goodell, John W.
  • Li, Zhongyuan

Abstract

Adopting natural gas as a transitional clean energy source is integral to China's energy transition, aiming to reduce reliance on high‑carbon fuels. This research utilizes a quasi-natural experiment created by the implementation of the Carbon Emissions Trading (CET) Policy to scrutinise its impact on natural gas consumption and the underlying mechanisms. Employing double differencing with annual city-level data spanning from 2006 to 2020, our analysis reveals several key findings. Firstly, the CET policy not only amplifies total natural gas consumption but also elevates the proportion of natural gas usage. Secondly, the boosting effect of CET on the proportion of natural gas consumption is reinforced by the proportion of tertiary industry and investment in innovation, although not affecting the total amount. Lastly, the promotional impact of CET policy on total natural gas consumption is more pronounced in eastern China, while the impact on the proportion of natural gas consumption is stronger in midwestern China. This study therefore elucidates vividly the CET policy's mechanism in driving China's energy transition through the promotion of natural gas consumption.

Suggested Citation

  • Cai, Lifeng & Du, Anna Min & Du, Qunyang & Goodell, John W. & Li, Zhongyuan, 2025. "Carbon emission trading policy and energy transition: Perspective from natural gas consumption in China," Energy Economics, Elsevier, vol. 150(C).
    • Handle: RePEc:eee:eneeco:v:150:y:2025:i:c:s0140988325006656
    DOI: 10.1016/j.eneco.2025.108838
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