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The Power of Trading Innovation: Is Market-Oriented Trading of Distributed Power Generation Greening the Energy Industry?

Author

Listed:
  • Zhu, Kai

    (Chinese Academy of International Trade and Economic Cooperation, Beijing 100710, China)

  • Cheng, Xiangran

    (School of Statistics, Tianjin University of Finance and Economics, Tianjin 300222, China)

  • Dong, Kangyin

    (School of International Trade and Economics, University of International Business and Economics, Beijing 100029, China)

  • Jamasb, Tooraj

    (Department of Economics, Copenhagen Business School)

Abstract

Amid the global green energy transition, China faces bottlenecks in renewable energy integration due to underdeveloped market-based trading systems. To address this gap, this study investigates the effectiveness of distributed power generation trading (DPGT) using panel data of Chinese cities between 2014 and 2023 and a multi-period difference-in-differences model. The findings show that (1) DPGT has significantly promoted the development of green energy industries; (2) the aggregation of talent and capital elements and green technology cooperation facilitate industrial growth; (3) the policy effects are more pronounced in non-resource-based cities, high energy-consuming cities, and cities that prioritize DPGT industries; (4) DPGT reduces emissions of conventional pollutants by displacing traditional thermal power generation. However, due to the peak shaving of thermal power and rebound effect, its carbon emissions reduction has not met expectations.

Suggested Citation

  • Zhu, Kai & Cheng, Xiangran & Dong, Kangyin & Jamasb, Tooraj, 2026. "The Power of Trading Innovation: Is Market-Oriented Trading of Distributed Power Generation Greening the Energy Industry?," Working Papers 6-2026, Copenhagen Business School, Department of Economics.
    • Handle: RePEc:hhs:cbsnow:2026_006
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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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