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Greening through trading: The role of policy Intervention on energy intensity

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  • Dong, Yajuan
  • Chen, Taiyu
  • Mao, Jun
  • Wu, Haitao

Abstract

Finding out if the Carbon Emissions Trading System (CETS) encourages lower energy intensity is vital in the vital field of energy research. The study utilizes data from 2005 to 2019 on China's carbon emissions trading pilot programs. It selects representative regions from eastern, central, and western China to conduct a quasi-natural experiment using the synthetic control method (SCM), aiming to investigate the impact of the CETS on energy intensity. The results indicate that the CETS is conducive to reducing energy intensity, but the implementation effects vary across regions. The central region achieved the best effect with a reduction of 24.8 %, followed by the western region with a reduction of 19.1 %, while the eastern region showed a relatively poor effect with a reduction of only 12.8 %. Additionally, the study applies a difference-in-differences (DID) model to explore potential pathways through which the CETS may influence energy intensity. The findings suggest that industrial optimization effect, energy structure effect and environmental regulation effect are significant drivers of energy intensity reduction. While these effects provide a plausible explanation for the observed impacts, further research is needed to establish direct causal relationships between the CETS and these pathways. The study highlights the importance of optimizing industrial and energy structures and strengthening environmental regulations as critical strategies for achieving a win-win scenario of economic development and low-carbon transition.

Suggested Citation

  • Dong, Yajuan & Chen, Taiyu & Mao, Jun & Wu, Haitao, 2025. "Greening through trading: The role of policy Intervention on energy intensity," Energy, Elsevier, vol. 314(C).
    • Handle: RePEc:eee:energy:v:314:y:2025:i:c:s0360544224039719
    DOI: 10.1016/j.energy.2024.134193
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