Unified efficiency under market-based climate policy: A regression control analysis of China’s carbon trading scheme in the metallurgical sector

The Carbon Emission Trading Scheme (CETS) is a key market-based policy for accelerating emission reductions and mitigating climate change. This study evaluates the effectiveness of CETS by introducing the Unified Efficiency Index (UEI)—a comprehensive efficiency index constructed by global DEA. Unlike prior research that focuses on singular outcomes like emission reductions or energy efficiency. Then, we employ the regression control method (RCM) to construct counterfactual scenarios. This approach can quantify the causal impact of CETS on UEI within China’s metallurgical sector, a critical high-emission industry. Empirical results show that CETS significantly enhances overall UEI efficiency, with heterogeneous effects across pilot regions. Provinces such as Fujian, Hubei, and Chongqing exhibit notable UEI improvements, with Chongqing’s annual treatment effect reaching 0.154. However, Shanghai remains unaffected, while Hubei shows policy effectiveness after a one-year lag. The policy’s efficacy diminishes over time, likely due to prolonged implementation cycles and diminishing marginal returns. Several robustness checks, including placebo tests and variable substitution, confirm the reliability of main findings. These outcomes advance the discourse on market-based environmental governance and align with global sustainability agendas, particularly SDGs 12 (Responsible Consumption) and 13 (Climate Action).