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How does emission trading reduce China's carbon intensity? An exploration using a decomposition and
Bo Zhou1, Cheng Zhang2, Haiying Song3
1College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China.
The Science of the Total Environment
|May 5, 2019
Summary
China's pilot emission trading programs significantly reduced carbon intensity, decreasing it by 0.026 tons/10,000 yuan annually. This effect was sustained and primarily driven by industrial structure adjustments, not energy efficiency improvements.
Area of Science:
- Environmental Economics
- Climate Change Policy
- Market-Based Environmental Regulation
Background:
- Emission trading is a key market-driven strategy for reducing carbon intensity.
- China launched pilot emission trading programs in seven provinces in 2013.
- Research on the specific effects and mechanisms of these pilots is limited.
Purpose of the Study:
- To empirically analyze the impact of China's emission trading pilots on carbon intensity reduction.
- To identify the key channels through which emission trading influences carbon intensity.
- To provide evidence-based insights for effective climate policy design.
Main Methods:
- Utilized a decomposition analysis approach.
- Employed a difference-in-differences (DID) methodology for empirical analysis.
- Analyzed data from pilot provinces to assess the impact on carbon intensity.
Main Results:
- Emission trading pilots led to a significant average annual reduction of approximately 0.026 tons/10,000 yuan in carbon intensity.
- The positive impact of emission trading on carbon intensity was found to be sustained and without a time lag.
- Industrial structure adjustment was identified as a significant channel for carbon intensity reduction, while energy structure and intensity channels were not yet effective.
Conclusions:
- China's emission trading pilots have successfully driven carbon intensity reduction.
- The policy demonstrates a stable and immediate effect, primarily through industrial restructuring.
- Further policy refinement may be needed to leverage energy-related channels for enhanced carbon reduction.