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Heterogeneous Effects of China’s Carbon Market on Carbon Emissions—Evidence from a Regression Control Method

Author

Listed:
  • Feng Liu

    (Institute of Economics, Shanghai Academy of Social Sciences, Shanghai 200020, China)

  • Yu Fu

    (School of Economics, Dongbei University of Finance and Economics, Dalian 116025, China)

  • Weiguo Wang

    (School of Economics, Dongbei University of Finance and Economics, Dalian 116025, China)

Abstract

Carbon trading markets are crucial policy instruments in carbon emission reduction and carbon neutrality. Yet, China’s pilot programs encounter diverse operational modes and environmental factors that might impact their effectiveness. This study uses panel data from 30 provinces (2000–2019) in China and the regression control method to evaluate and analyze the heterogeneous effects of carbon trading pilots (CTPs) on emission reduction. Results reveal three types of CTP effects which are as follows: reducing both total carbon emissions (TCEs) and carbon intensity (CI) as noticed in Shanghai; decreasing CI while increasing TCE as seen in Beijing, Tianjin, Guangdong, and Hubei; and raising both TCE and CI as observed in Chongqing and Fujian. Significantly, market mechanisms in carbon pricing and state intervention, including of state-owned enterprises, play notable roles in these effects. Furthermore, CTP policies display both intensity reduction and energy rebound effects; the direction of carbon emission reduction relies on the balance between these effects. The findings offer empirical support to enhance carbon market effectiveness and provide valuable insights for regions in China and globally in order to tailor policies based on their specific conditions.

Suggested Citation

  • Feng Liu & Yu Fu & Weiguo Wang, 2023. "Heterogeneous Effects of China’s Carbon Market on Carbon Emissions—Evidence from a Regression Control Method," Sustainability, MDPI, vol. 16(1), pages 1-20, December.
    • Handle: RePEc:gam:jsusta:v:16:y:2023:i:1:p:89-:d:1304663
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    References listed on IDEAS

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