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Does carbon emissions trading affect the financial performance of high energy-consuming firms in China?


  • Yue-Jun Zhang

    () (Hunan University
    Hunan University)

  • Jing-Yue Liu

    (Hunan University
    Hunan University)


Whether China’s carbon emissions trading (CET) has an impact on the financial performance of the market players of carbon trading, i.e., firms, is crucial to the sustainable development of national economy and carbon trading market. Based on the panel data of the listed firms in the seven high energy-consuming industries in China during 2010–2017, this paper uses the DID model to study the impact of CET on the firms’ financial performance. The empirical results show that the impact of CET on firms’ financial performance presents obvious industrial heterogeneity; CET policy reduces the financial performance of firms in the nonferrous metal industry but improves that in the power industry. In addition, with the implementation of CET policy, its impact on the financial performance of firms in the nonferrous metal and power industries is increasingly intensifying. Finally, there is a lag of 2–4 years on the impact of CET on the firms’ financial performance in the chemical, paper and aviation industries, and the effects change from negative to positive over time. That is, CET policy can hardly ensure that all firms are profitable in the short term, but there is still the possibility of profitability in the long term.

Suggested Citation

  • Yue-Jun Zhang & Jing-Yue Liu, 2019. "Does carbon emissions trading affect the financial performance of high energy-consuming firms in China?," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 95(1), pages 91-111, January.
  • Handle: RePEc:spr:nathaz:v:95:y:2019:i:1:d:10.1007_s11069-018-3434-5
    DOI: 10.1007/s11069-018-3434-5

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    2. Zhang, Yue-Jun & Liu, Jing-Yue & Su, Bin, 2020. "Carbon congestion effects in China's industry: Evidence from provincial and sectoral levels," Energy Economics, Elsevier, vol. 86(C).

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