IDEAS home Printed from https://ideas.repec.org/a/sae/engenv/v36y2025i7p3395-3415.html

Towards a greener future: Assessing the impact of carbon emission trading on urban carbon efficiency in China

Author

Listed:
  • Lulu Liu
  • Yanyin Lv
  • Da Gao
  • Xinlin Mo

Abstract

The pursuit of a low-carbon transition is central to achieving green development worldwide, and China has embraced carbon emissions trading (CET) with the aim of achieving high-quality economic development. Despite its critical policy importance, the question of whether and how CET promotes carbon efficiency remains unclear. Using unique panel data covering prefecture-level cities in China from 2007 to 2020, this study first fills this gap by constructing the Global-EBM model and taking carbon dioxide as an undesirable output to innovatively evaluate the total factor carbon emission efficiency (TFCEE) of China's cities. Second, as an extension of the existing provincial evidence, we treat the carbon trading scheme in urban China as a quasi-natural experiment and confirm the boosting effect of CET on TFCEE in the pilot cities. Third, the mediating roles of both green technology innovation and industrial structure upgrading in the process of promoting carbon efficiency are identified, further demonstrating the channel influences. Finally, the heterogeneous impact of the CET policy is further investigated and found to be stronger in eastern and developed cities. Our findings have important policy implications for China's green transition.

Suggested Citation

  • Lulu Liu & Yanyin Lv & Da Gao & Xinlin Mo, 2025. "Towards a greener future: Assessing the impact of carbon emission trading on urban carbon efficiency in China," Energy & Environment, , vol. 36(7), pages 3395-3415, November.
    • Handle: RePEc:sae:engenv:v:36:y:2025:i:7:p:3395-3415
    DOI: 10.1177/0958305X231217646
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0958305X231217646
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0958305X231217646?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Guo, Ran & Yuan, Yijun, 2020. "Different types of environmental regulations and heterogeneous influence on energy efficiency in the industrial sector: Evidence from Chinese provincial data," Energy Policy, Elsevier, vol. 145(C).
    2. Pastor, Jesus T. & Lovell, C.A. Knox, 2005. "A global Malmquist productivity index," Economics Letters, Elsevier, vol. 88(2), pages 266-271, August.
    3. Liu, Qing & Qiu, Larry D., 2016. "Intermediate input imports and innovations: Evidence from Chinese firms' patent filings," Journal of International Economics, Elsevier, vol. 103(C), pages 166-183.
    4. Chen, Zhongfei & Zhang, Xiao & Chen, Fanglin, 2021. "Do carbon emission trading schemes stimulate green innovation in enterprises? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    5. Sofia Ribeiro & Audrey Limoges & Guillaume Massé & Kasper L. Johansen & William Colgan & Kaarina Weckström & Rebecca Jackson & Eleanor Georgiadis & Naja Mikkelsen & Antoon Kuijpers & Jesper Olsen & St, 2021. "Vulnerability of the North Water ecosystem to climate change," Nature Communications, Nature, vol. 12(1), pages 1-12, December.
    6. Ge Li & Da Gao & Yi Li, 2023. "Impacts of Market‐based Environmental Regulation on Green Total Factor Energy Efficiency in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(3), pages 92-114, May.
    7. Li, Rongrong & Han, Xinyu & Wang, Qiang, 2023. "Do technical differences lead to a widening gap in China's regional carbon emissions efficiency? Evidence from a combination of LMDI and PDA approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 182(C).
    8. Ali, Syed Ahtsham & Alharthi, Majed & Hussain, Hafezali Iqbal & Rasul, Farhat & Hanif, Imran & Haider, Jahanzaib & Ullah, Saad & ur Rahman, Saeed & Abbas, Qaiser, 2021. "A clean technological innovation and eco-efficiency enhancement: A multi-index assessment of sustainable economic and environmental management," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    9. Cai, Bofeng & Guo, Huanxiu & Ma, Zipeng & Wang, Zhixuan & Dhakal, Shobhakar & Cao, Libin, 2019. "Benchmarking carbon emissions efficiency in Chinese cities: A comparative study based on high-resolution gridded data," Applied Energy, Elsevier, vol. 242(C), pages 994-1009.
    10. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    11. Sun, J. W., 2005. "The decrease of CO2 emission intensity is decarbonization at national and global levels," Energy Policy, Elsevier, vol. 33(8), pages 975-978, May.
    12. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.
    13. Yang, Qiuyue & Gao, Da & Song, Deyong & Li, Yi, 2021. "Environmental regulation, pollution reduction and green innovation: The case of the Chinese Water Ecological Civilization City Pilot policy," Economic Systems, Elsevier, vol. 45(4).
    14. Liu, Yunqiang & Liu, Sha & Shao, Xiaoyu & He, Yanqiu, 2022. "Policy spillover effect and action mechanism for environmental rights trading on green innovation: Evidence from China's carbon emissions trading policy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    15. Necmi Avkiran & Kaoru Tone & Miki Tsutsui, 2008. "Bridging radial and non-radial measures of efficiency in DEA," Annals of Operations Research, Springer, vol. 164(1), pages 127-138, November.
    16. Lu, Yi & Tao, Zhigang & Zhu, Lianming, 2017. "Identifying FDI spillovers," Journal of International Economics, Elsevier, vol. 107(C), pages 75-90.
    17. Gao, Da & Li, Ge & Yu, Jiyu, 2022. "Does digitization improve green total factor energy efficiency? Evidence from Chinese 213 cities," Energy, Elsevier, vol. 247(C).
    18. Huang, Hongyun & Mo, Renbian & Chen, Xingquan, 2021. "New patterns in China's regional green development: An interval Malmquist–Luenberger productivity analysis," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 161-173.
    19. Zhang, Ning & Wang, Bing & Liu, Zhu, 2016. "Carbon emissions dynamics, efficiency gains, and technological innovation in China's industrial sectors," Energy, Elsevier, vol. 99(C), pages 10-19.
    20. Zhang, Shengling & Wang, Yao & Hao, Yu & Liu, Zhiwei, 2021. "Shooting two hawks with one arrow: Could China's emission trading scheme promote green development efficiency and regional carbon equality?," Energy Economics, Elsevier, vol. 101(C).
    21. Zhao, Xiaomeng & Liu, Chuanjiang & Sun, Chuanwang & Yang, Mian, 2020. "Does stringent environmental regulation lead to a carbon haven effect? Evidence from carbon-intensive industries in China," Energy Economics, Elsevier, vol. 86(C).
    22. Selene Cobo & Ángel Galán-Martín & Victor Tulus & Mark A. J. Huijbregts & Gonzalo Guillén-Gosálbez, 2022. "Human and planetary health implications of negative emissions technologies," Nature Communications, Nature, vol. 13(1), pages 1-11, December.
    23. Yang Liu & Ruochan Xiong & Shigong Lv & Da Gao, 2022. "The Impact of Digital Finance on Green Total Factor Energy Efficiency: Evidence at China’s City Level," Energies, MDPI, vol. 15(15), pages 1-17, July.
    24. Wang, Guofeng & Deng, Xiangzheng & Wang, Jingyu & Zhang, Fan & Liang, Shiqi, 2019. "Carbon emission efficiency in China: A spatial panel data analysis," China Economic Review, Elsevier, vol. 56(C), pages 1-1.
    25. Minda Ma & Liyin Shen & Hong Ren & Weiguang Cai & Zhili Ma, 2017. "How to Measure Carbon Emission Reduction in China’s Public Building Sector: Retrospective Decomposition Analysis Based on STIRPAT Model in 2000–2015," Sustainability, MDPI, vol. 9(10), pages 1-16, September.
    26. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    27. 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).
    28. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
    Full references (including those not matched with items on IDEAS)

    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. Jie Zhang & Zhencheng Xing & Jigan Wang, 2016. "Analysis of CO 2 Emission Performance and Abatement Potential for Municipal Industrial Sectors in Jiangsu, China," Sustainability, MDPI, vol. 8(7), pages 1-15, July.
    2. Justas Streimikis & Zhuang Miao & Tomas Balezentis, 2021. "Creation of climate‐smart and energy‐efficient agriculture in the European Union: Pathways based on the frontier analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 576-589, January.
    3. Adel Hatami-Marbini & Aliasghar Arabmaldar & John Otu Asu, 2022. "Robust productivity growth and efficiency measurement with undesirable outputs: evidence from the oil industry," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(4), pages 1213-1254, December.
    4. Sala-Garrido, Ramon & Mocholi-Arce, Manuel & Maziotis, Alexandros & Molinos-Senante, María, 2023. "The carbon and production performance of water utilities: Evidence from the English and Welsh water industry," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 292-300.
    5. Shixiong Cheng & Jiahui Xie & De Xiao & Yun Zhang, 2019. "Measuring the Environmental Efficiency and Technology Gap of PM 2.5 in China’s Ten City Groups: An Empirical Analysis Using the EBM Meta-Frontier Model," IJERPH, MDPI, vol. 16(4), pages 1-22, February.
    6. Ramón Sala-Garrido & Manuel Mocholí-Arce & María Molinos-Senante & Alexandros Maziotis, 2021. "Comparing Operational, Environmental and Eco-Efficiency of Water Companies in England and Wales," Energies, MDPI, vol. 14(12), pages 1-14, June.
    7. Qin, Quande & Li, Xin & Li, Li & Zhen, Wei & Wei, Yi-Ming, 2017. "Air emissions perspective on energy efficiency: An empirical analysis of China’s coastal areas," Applied Energy, Elsevier, vol. 185(P1), pages 604-614.
    8. Ruijing Zheng & Yu Cheng & Haimeng Liu & Wei Chen & Xiaodong Chen & Yaping Wang, 2022. "The Spatiotemporal Distribution and Drivers of Urban Carbon Emission Efficiency: The Role of Technological Innovation," IJERPH, MDPI, vol. 19(15), pages 1-22, July.
    9. Pastor, Jesus T. & Lovell, C.A. Knox & Aparicio, Juan, 2020. "Defining a new graph inefficiency measure for the proportional directional distance function and introducing a new Malmquist productivity index," European Journal of Operational Research, Elsevier, vol. 281(1), pages 222-230.
    10. Łukasz Brzezicki, 2020. "Efektywność i produktywność administracji szkolnictwa wyższego," Studia z Polityki Publicznej / Public Policy Studies, Warsaw School of Economics, vol. 7(1), pages 1-17.
    11. Zhang, Ning & Zhao, Yu & Wang, Na, 2022. "Is China's energy policy effective for power plants? Evidence from the 12th Five-Year Plan energy saving targets," Energy Economics, Elsevier, vol. 112(C).
    12. Min Wang & Meng Ji & Xiaofen Wu & Kexin Deng & Xiaodong Jing, 2023. "Analysis on Evaluation and Spatial-Temporal Evolution of Port Cluster Eco-Efficiency: Case Study from the Yangtze River Delta in China," Sustainability, MDPI, vol. 15(10), pages 1-16, May.
    13. Huang, Hongyun & Wang, Fengrong & Song, Malin & Balezentis, Tomas & Streimikiene, Dalia, 2021. "Green innovations for sustainable development of China: Analysis based on the nested spatial panel models," Technology in Society, Elsevier, vol. 65(C).
    14. K. Tone & M. Tsutsui, 2015. "How to Deal with Non-Convex Frontiers in Data Envelopment Analysis," Journal of Optimization Theory and Applications, Springer, vol. 166(3), pages 1002-1028, September.
    15. Jindal, Abhinav & Nilakantan, Rahul, 2021. "Falling efficiency levels of Indian coal-fired power plants: A slacks-based analysis," Energy Economics, Elsevier, vol. 93(C).
    16. Jradi, Samah & Bouzdine Chameeva, Tatiana & Aparicio, Juan, 2019. "The measurement of revenue inefficiency over time: An additive perspective," Omega, Elsevier, vol. 83(C), pages 167-180.
    17. Chen, Weidong & Geng, Wenxin, 2017. "Fossil energy saving and CO2 emissions reduction performance, and dynamic change in performance considering renewable energy input," Energy, Elsevier, vol. 120(C), pages 283-292.
    18. Chiu, Yung-Ho & Lee, Jen-Hui & Lu, Ching-Cheng & Shyu, Ming-Kuang & Luo, Zhengying, 2012. "The technology gap and efficiency measure in WEC countries: Application of the hybrid meta frontier model," Energy Policy, Elsevier, vol. 51(C), pages 349-357.
    19. Shiu-Wan Hung & Chao-Liang Chang & Shu Ming Liu, 2019. "Innovation System Assessment Model for Sustainability Planning in Taiwan," Sustainability, MDPI, vol. 11(24), pages 1-24, December.
    20. Ruomeng Zhou & Yunsheng Zhang, 2023. "Measurement of Urban Green Total Factor Productivity and Analysis of Its Temporal and Spatial Evolution in China," Sustainability, MDPI, vol. 15(12), pages 1-32, June.

    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:sae:engenv:v:36:y:2025:i:7:p:3395-3415. 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: SAGE Publications (email available below). General contact details of provider: .

    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.