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Does China’s Carbon Trading Pilot Policy Reduce Carbon Emissions? Empirical Analysis from 285 Cities

Author

Listed:
  • Xuehui Yang

    (School of Business, Jinggangshan University, Ji’an 343009, China)

  • Jiaping Zhang

    (School of Public Administration, Faculty of Economics and Management, East China Normal University, Shanghai 200062, China)

  • Lehua Bi

    (School of Economics, Guangxi University, Nanning 530004, China
    Xingjian School of Science & Liberal Arts, Guangxi University, Nanning 530004, China)

  • Yiming Jiang

    (School of Business, Jinggangshan University, Ji’an 343009, China)

Abstract

This article studies the influence of the Carbon Trading Pilot Policy (CTPP) on carbon emissions by constructing the balanced panel data from 2003 to 2020 for 285 cities in China above the prefecture level. Difference-in-Difference (DID) method is used to test the influence and the mechanism. (1) The findings suggested that CTPP has dramatically reduced China’s carbon emissions by 6.21%. The parallel trend test shows that the premise of DID is reliable. (2) A variety of robustness tests, such as the instrumental variable method for endogeneity, Propensity Score Matching (PSM) for sample selection bias, variable substitution, time–bandwidth change, and exclusion of policy intervention, show that the conclusion is still robust. (3) The mediation mechanism test indicates that CTPP can promote the reduction in carbon emissions by promoting Green Consumption Transformation (GCT), improving Ecological Efficiency (EE), and promoting Industrial Structure Upgrading (ISU). GCT contributes the most, followed by EE and ISU. (4) The analysis of the heterogeneity reveals that CTPP has a greater effect on carbon emission reduction in central and peripheral cities in China. This study provides policy implications for China and similar developing countries in the face of carbon reduction.

Suggested Citation

  • Xuehui Yang & Jiaping Zhang & Lehua Bi & Yiming Jiang, 2023. "Does China’s Carbon Trading Pilot Policy Reduce Carbon Emissions? Empirical Analysis from 285 Cities," IJERPH, MDPI, vol. 20(5), pages 1-24, March.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:5:p:4421-:d:1084956
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