Price and scale effects of China's carbon emission trading system pilots on emission reduction

Constructing and adopting a county-level panel dataset containing carbon emission (CO₂) and economic information between 2009 and 2017, this paper employs the continuous difference-in-differences (DID) model and is among the first to conduct an evaluation of the CO₂ reduction effect of China's emission trading scheme (ETS) pilot markets from the dual perspectives of price and scale. The empirical results emerge that the increase of transaction price and the expansion of transaction volume in ETS pilots have a persistent and significant influence on CO₂ reduction. Parallel to this, it is found the rising of transaction price in ETS can be effective on CO₂ reduction by improving the energy structure transition, however, optimization of industrial structure and the development of ICT might be the essential channels driven by the expansion of transaction volume. Last, this paper identifies the synergistic effect on different sorts of contaminants and find it is more substantial to those with the gas state. This paper implies that the policymakers should fully excavate the market-oriented environmental regulation tools from transaction price and volume perspective of views for the well achieving the climate ambitions of carbon peak and neutrality.