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The Efficiency of China’s Carbon Trading Schemes: A Tale of Seven Pilot Markets

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  • Yigang Wei

    (School of Economics and Management, Beihang University, Beijing 100191, China
    Laboratory for Low-Carbon Intelligent Governance, Beihang University, Beijing 100191, China
    Beijing Key Laboratory of Emergency Support Simulation Technologies for City Operation, Beijing 100191, China)

  • Yan Li

    (Business School, Shandong University, Weihai 264209, China)

  • Julien Chevallier

    (Economics Deparment, Universté Paris 8 (LED), 2 rue de la Liberté, 93526 Saint-Denis, France)

  • Michal Wojewodzki

    (Department of Finance, Faculty of Business, Lingnan University, Hong Kong)

Abstract

This study evaluates the efficiency of China’s seven emission trading schemes (ETS) piloted in 2013. We evaluate seven pilots’ overall technical and scale efficiencies and temporal dynamics during 2014–2023. We use a bootstrap correction data envelopment analysis (bootstrap-DEA), which guarantees a more accurate efficiency estimation than the traditional DEA model. The results show that the average overall (pure technical) efficiency of the seven pilot markets increased from 0.612 (0.844) in 2014 to 0.898 (0.990) in 2023. Furthermore, we document that seven ETS pilots differ remarkably in efficiency and transaction price, whilst all have shortages. Specifically, the small-scale market transaction is the main constraint effect on the average scale efficiency of the ETS. This study provides concrete recommendations for policy makers to consummate institutional designs to improve ETS efficiency.

Suggested Citation

  • Yigang Wei & Yan Li & Julien Chevallier & Michal Wojewodzki, 2024. "The Efficiency of China’s Carbon Trading Schemes: A Tale of Seven Pilot Markets," Commodities, MDPI, vol. 3(3), pages 1-21, August.
    • Handle: RePEc:gam:jcommo:v:3:y:2024:i:3:p:20-375:d:1467158
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    References listed on IDEAS

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    1. Yifan Wang & Yufeiyang Zeng & Zongfa Wu, 2025. "Risk Spillover in the Carbon-Stock System and Sustainability Transition: Empirical Evidence from China’s ETS Pilots and A-Share Emission-Regulated Firms," Sustainability, MDPI, vol. 17(10), pages 1-30, May.

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