IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i17p10818-d901904.html
   My bibliography  Save this article

The Impact of Carbon Emissions Trading Pilot Policy on Industrial Structure Upgrading

Author

Listed:
  • Zhaoyang Zhao

    (North-China Company, Sinopec Chemical Commercial Holding Company Limited, Beijing 100029, China
    These authors contributed equally to this work.)

  • Shuning Zhou

    (School of Economics and Resource Management, Beijing Normal University, Beijing 100875, China
    These authors contributed equally to this work.)

  • Siying Wang

    (School of Business, Beijing Technology and Business University, Beijing 102488, China)

  • Chong Ye

    (School of Economics and Management, Fuzhou University, Fuzhou 350108, China)

  • Tuolei Wu

    (School of Economics and Management, Tongji University, Shanghai 200092, China)

Abstract

Using the carbon emissions trading pilot policy implemented since 2011 as a quasi-natural experiment, this paper constructs a multi-period DID model based on panel data of 280 prefecture-level cities from 2006–2019 to explore the impact of the carbon emissions trading pilot policy on industrial structure upgrading and conducts a heterogeneity test and mechanism test. This study finds that the carbon emissions trading pilot policy significantly promotes the upgrading of industrial structures, especially for larger cities and non-resource-based cities. Further exploration of the impact mechanism shows that the carbon emissions trading pilot policy promotes industrial structure upgrading mainly through green innovation. The findings of the study have significant implications for the construction of a high-quality, modernized economic system in China.

Suggested Citation

  • Zhaoyang Zhao & Shuning Zhou & Siying Wang & Chong Ye & Tuolei Wu, 2022. "The Impact of Carbon Emissions Trading Pilot Policy on Industrial Structure Upgrading," Sustainability, MDPI, vol. 14(17), pages 1-25, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:17:p:10818-:d:901904
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/17/10818/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/17/10818/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhou, Qian & Zhong, Shihu & Shi, Tao & Zhang, Xiaoling, 2021. "Environmental regulation and haze pollution: Neighbor-companion or neighbor-beggar?," Energy Policy, Elsevier, vol. 151(C).
    2. De Cian, Enrica & Tavoni, Massimo, 2012. "Do technology externalities justify restrictions on emission permit trading?," Resource and Energy Economics, Elsevier, vol. 34(4), pages 624-646.
    3. Wei Liu & Jian Tong & Xiaohang Yue, 2016. "How Does Environmental Regulation Affect Industrial Transformation? A Study Based on the Methodology of Policy Simulation," Mathematical Problems in Engineering, Hindawi, vol. 2016, pages 1-10, March.
    4. Ralf Martin & Mirabelle Mu?ls & Laure B. de Preux & Ulrich J. Wagner, 2014. "Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme," American Economic Review, American Economic Association, vol. 104(8), pages 2482-2508, August.
    5. Markusen James R. & Morey Edward R. & Olewiler Nancy D., 1993. "Environmental Policy when Market Structure and Plant Locations Are Endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 69-86, January.
    6. Mohr, Robert D., 2002. "Technical Change, External Economies, and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 158-168, January.
    7. Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November.
    8. Raphael Calel & Antoine Dechezleprêtre, 2016. "Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 173-191, March.
    9. Min Wang & Lindu Zhao & Michael Herty, 2018. "Modelling carbon trading and refrigerated logistics services within a fresh food supply chain under carbon cap-and-trade regulation," International Journal of Production Research, Taylor & Francis Journals, vol. 56(12), pages 4207-4225, June.
    10. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    11. Zhu, Bangzhu & Zhang, Mengfan & Zhou, Yanhua & Wang, Ping & Sheng, Jichuan & He, Kaijian & Wei, Yi-Ming & Xie, Rui, 2019. "Exploring the effect of industrial structure adjustment on interprovincial green development efficiency in China: A novel integrated approach," Energy Policy, Elsevier, vol. 134(C).
    12. Shan-Li Wang & Feng-Wen Chen & Bing Liao & Cuiju Zhang, 2020. "Foreign Trade, FDI and the Upgrading of Regional Industrial Structure in China: Based on Spatial Econometric Model," Sustainability, MDPI, vol. 12(3), pages 1-16, January.
    13. Guibo Liu & Huimin Fang & Xiaoxian Gong & Feifei Wang, 2021. "Inclusive finance, industrial structure upgrading and farmers’ income: Empirical analysis based on provincial panel data in China," PLOS ONE, Public Library of Science, vol. 16(10), pages 1-24, October.
    14. Yong-Gun Kim & Jong-Soo Lim, 2021. "Treatment of indirect emissions from the power sector in Korean emissions trading system," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(3), pages 581-592, July.
    15. Hendrik Wolff, 2014. "Keep Your Clunker in the Suburb: Low‐emission Zones and Adoption of Green Vehicles," Economic Journal, Royal Economic Society, vol. 124(578), pages 481-512, August.
    16. Bruce Domazlicky & William Weber, 2004. "Does Environmental Protection Lead to Slower Productivity Growth in the Chemical Industry?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(3), pages 301-324, July.
    17. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    18. Hongshan Ai & Shenglan Hu & Ke Li & Shuai Shao, 2020. "Environmental regulation, total factor productivity, and enterprise duration: Evidence from China," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2284-2296, September.
    19. Sung-Hyun Jun & Jee Young Kim & Hyungna Oh, 2021. "Evaluating the impact of the KETS on GHG reduction in the first phase," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(3), pages 613-638, July.
    20. Zhang, Wei & Li, Guoxiang & Guo, Fanyong, 2022. "Does carbon emissions trading promote green technology innovation in China?," Applied Energy, Elsevier, vol. 315(C).
    21. Yang, Lin & Li, Fengyu & Zhang, Xian, 2016. "Chinese companies’ awareness and perceptions of the Emissions Trading Scheme (ETS): Evidence from a national survey in China," Energy Policy, Elsevier, vol. 98(C), pages 254-265.
    22. Wolff, Hendrik, 2014. "Keep Your Clunker in the Suburb: Low Emission Zones and Adoption of Green Vehicles," IZA Discussion Papers 8180, Institute of Labor Economics (IZA).
    23. Hu, Yucai & Ren, Shenggang & Wang, Yangjie & Chen, Xiaohong, 2020. "Can carbon emission trading scheme achieve energy conservation and emission reduction? Evidence from the industrial sector in China," Energy Economics, Elsevier, vol. 85(C).
    24. Azadegan, Arash & Wagner, Stephan M., 2011. "Industrial upgrading, exploitative innovations and explorative innovations," International Journal of Production Economics, Elsevier, vol. 130(1), pages 54-65, March.
    25. Rogge, Karoline S. & Schneider, Malte & Hoffmann, Volker H., 2011. "The innovation impact of the EU Emission Trading System -- Findings of company case studies in the German power sector," Ecological Economics, Elsevier, vol. 70(3), pages 513-523, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wenqi Zhao & Moau Yong Toh, 2023. "Impact of Innovative City Pilot Policy on Industrial Structure Upgrading in China," Sustainability, MDPI, vol. 15(9), pages 1-22, April.
    2. Liu, Feng & van den Bergh, Jeroen & Wei, Yihang, 2024. "Testing mechanisms through which China's ETS promotes a low-carbon transition," Energy Economics, Elsevier, vol. 132(C).
    3. Siqing You & Han Zhao & Hongli Zhou & Chaoyu Zhang & Zican Li, 2023. "The Impact of Ecological Governance on Industrial Structure Upgrading under the Dual Carbon Target," Sustainability, MDPI, vol. 15(11), pages 1-17, May.
    4. Zhang, Caiping & Liu, Falong & Wu, Dawei & Tan, Deming & Niu, Linping, 2025. "The impact of the carbon emissions trading scheme on corporate strategic deviance in China," Technological Forecasting and Social Change, Elsevier, vol. 212(C).
    5. Ou, Yifu & Bao, Zhikang & Ng, S. Thomas & Song, Weize & Chen, Ke, 2024. "Land-use carbon emissions and built environment characteristics: A city-level quantitative analysis in emerging economies," Land Use Policy, Elsevier, vol. 137(C).
    6. Shiheng Xie & Pengbo Zhao & Shuping Wang, 2025. "How Does the Carbon Emission Trading Policy Enhance Corporate Green Technology Innovation? Evidence from Advanced Manufacturing Enterprises," Sustainability, MDPI, vol. 17(18), pages 1-21, September.
    7. 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.
    8. Wang, Zhengzhong & Wei, Yunjie & Wang, Shouyang, 2025. "Forecasting the carbon price of China's national carbon market: A novel dynamic interval-valued framework," Energy Economics, Elsevier, vol. 141(C).
    9. Qidi Wang & Jinyan Zhan & Hailin Zhang & Yuhan Cao & Zheng Yang & Quanlong Wu & Ali Raza Otho, 2025. "China’s Carbon Emissions Trading Market: Current Situation, Impact Assessment, Challenges, and Suggestions," Land, MDPI, vol. 14(8), pages 1-27, August.
    10. Zhou, Wenbin & Cleaver, Christopher J. & Dunant, Cyrille F. & Allwood, Julian M. & Lin, Jianguo, 2023. "Cost, range anxiety and future electricity supply: A review of how today's technology trends may influence the future uptake of BEVs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 173(C).
    11. Chong Liu & Haixin Huang & Jianfei Yang, 2025. "Can Land System Innovation Promote the Improvement of Green Land Use Efficiency in Urban Land—Evidence from China’s Pilot Reform of the Approval System for Urban Construction Land," Land, MDPI, vol. 14(4), pages 1-23, April.
    12. Yaping Wang & Hongxiao Zhao & Dan Wang & Yu Cheng, 2025. "Self-Sufficient Carbon Emission Reduction in Resource-Based Cities: Evidence of Green Technology Innovation," Sustainability, MDPI, vol. 17(11), pages 1-15, June.
    13. Hu, Feifei & Chang, Huibin & Wang, Dongxue & Chen, Xiaowei, 2025. "Fostering green technological innovation through carbon emission trading policies," Finance Research Letters, Elsevier, vol. 74(C).
    14. Yuhang Dai & Rui He, 2025. "The Impact of Carbon Emissions Trading Policy on the ESG Performance of Heavy-Polluting Enterprises: The Mediating Role of Green Technological Innovation and Financing Constraints," Sustainability, MDPI, vol. 17(4), pages 1-22, February.
    15. Xiaoqing Ai & Yuchan Jin, 2025. "Analysis of the Impact and Mechanism of Carbon Trading Pilot Policies on the Urban-Rural Income Gap," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 15(6), pages 1-8.
    16. Wenjun Ge & Derong Yang & Weineng Chen & Sheng Li, 2023. "Can Setting Up a Carbon Trading Mechanism Improve Urban Eco-Efficiency? Evidence from China," Sustainability, MDPI, vol. 15(4), pages 1-19, February.
    17. Hu, Jun & Zhang, Siyu & Wang, Liang & Yao, Daifei, 2024. "Carbon emission trading scheme, investors’ attention, and earnings response coefficients," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 97(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maogang Tang & Silu Cheng & Wenqing Guo & Weibiao Ma & Fengxia Hu, 2023. "Relationship between carbon emission trading schemes and companies’ total factor productivity: evidence from listed companies in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11735-11767, October.
    2. Dechezleprêtre, Antoine & Kozluk, Tomasz & Kruse, Tobias & Nachtigall, Daniel & de Serres, Alain, 2019. "Do Environmental and Economic Performance Go Together? A Review of Micro-level Empirical Evidence from the Past Decade or So," International Review of Environmental and Resource Economics, now publishers, vol. 13(1-2), pages 1-118, April.
    3. Simone Borghesi & Chiara Franco & Giovanni Marin, 2016. "Outward Foreign Direct Investments Patterns of Italian Firms in the EU ETS," SEEDS Working Papers 0116, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jan 2016.
    4. Ren, Shenggang & Yang, Xuanyu & Hu, Yucai & Chevallier, Julien, 2022. "Emission trading, induced innovation and firm performance," Energy Economics, Elsevier, vol. 112(C).
    5. Antoine Dechezleprêtre & Misato Sato, 2017. "The Impacts of Environmental Regulations on Competitiveness," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 183-206.
    6. Shi, Beibei & Feng, Chen & Qiu, Meng & Ekeland, Anders, 2018. "Innovation suppression and migration effect: The unintentional consequences of environmental regulation," China Economic Review, Elsevier, vol. 49(C), pages 1-23.
    7. Zhou, Fengxiu & Wang, Xiaoyu, 2022. "The carbon emissions trading scheme and green technology innovation in China: A new structural economics perspective," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 365-381.
    8. Claudia Ranocchia & Luca Lambertini, 2021. "Porter Hypothesis vs Pollution Haven Hypothesis: Can There Be Environmental Policies Getting Two Eggs in One Basket?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(1), pages 177-199, January.
    9. Fabio Antoniou & Efthymia Kyriakopoulou, 2019. "On the Strategic Effect of International Permits Trading on Local Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1299-1329, November.
    10. repec:diw:diwwpp:dp1689 is not listed on IDEAS
    11. Frédéric Branger & Oskar Lecuyer & Philippe Quirion, 2013. "The European Union Emissions Trading System : should we throw the flagship out with the bathwater ?," Working Papers hal-00866408, HAL.
    12. Xiaoning Zhang & Mei Qu, 2020. "Impact of Environmental Regulation on Scientific and Technological Competitiveness of Resource-Based Cities in China—Based on Panel Data of 33 Resource-Based Cities," IJERPH, MDPI, vol. 17(24), pages 1-16, December.
    13. Hong, Qianqian & Cui, Linhao & Hong, Penghui, 2022. "The impact of carbon emissions trading on energy efficiency: Evidence from quasi-experiment in China's carbon emissions trading pilot," Energy Economics, Elsevier, vol. 110(C).
    14. Koch, Nicolas & Basse Mama, Houdou, 2019. "Does the EU Emissions Trading System induce investment leakage? Evidence from German multinational firms," Energy Economics, Elsevier, vol. 81(C), pages 479-492.
    15. Xu, Aiting & Zhu, Yuhan & Wang, Wenpu, 2023. "Micro green technology innovation effects of green finance pilot policy—From the perspectives of action points and green value," Journal of Business Research, Elsevier, vol. 159(C).
    16. Yu Zhang & Jie Wang & Jiakai Chen & Weizhong Liu, 2023. "Does environmental regulation policy help improve business performance of manufacturing enterprises? evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(5), pages 4335-4364, May.
    17. Wu, Rongxin & Tan, Zhizhou & Lin, Boqiang, 2023. "Does carbon emission trading scheme really improve the CO2 emission efficiency? Evidence from China's iron and steel industry," Energy, Elsevier, vol. 277(C).
    18. Naegele, Helene & Zaklan, Aleksandar, 2019. "Does the EU ETS cause carbon leakage in European manufacturing?," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 125-147.
    19. Jian Song & Jing Wang & Zhe Chen, 2022. "How Low-Carbon Pilots Affect Chinese Urban Energy Efficiency: An Explanation from Technological Progress," IJERPH, MDPI, vol. 19(23), pages 1-30, November.
    20. Lassi Ahlvik & Matti Liski, 2019. "Think global, act local! A mechanism for global commons and mobile firms," CESifo Working Paper Series 7597, CESifo.
    21. Borghesi, Simone & Flori, Andrea, 2018. "EU ETS facets in the net: Structure and evolution of the EU ETS network," Energy Economics, Elsevier, vol. 75(C), pages 602-635.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:17:p:10818-:d:901904. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.