Evaluation of carbon emission reduction effect and porter effect of China's carbon trading policy

It will contribute to ameliorating the national carbon trading system and further benefit the realization of China's carbon peaking and carbon neutrality goals through in-depth study and summarize the effectiveness of carbon trading policy implementation in pilot areas. Based on the multi-phase difference-in-differences approach and synthetic control method, this paper utilizes China's provincial panel data from 2006 to 2020 to comprehensively assess the Porter effect (including the economic and green innovation effects) and carbon mitigation effect of carbon trading policy from the overall and local perspectives. Then the robustness test and mechanism analysis are carried out. The findings show that: (1) from the overall effect, the carbon trading policy brings a noticeable carbon mitigation effect and Porter effect, and the intensity of the impact keeps changing over time; (2) there is significant heterogeneity in the local effects of this policy on the eight pilot provinces and cities, with only Chongqing obtaining both the Porter effect and the carbon mitigation effect, while the rest of the regions do not yield the triple dividend of economic, environmental, and green innovation simultaneously; (3) there are much more prominent environment and green innovation effects in the developed regions, while the underdeveloped ones have better economic development and no green innovation effect; (4) the policy can bring environmental and economic dividends through energy structure optimization. However, due to the carbon rebound effect, stimulating green innovation pathways can only boost the economy while carbon emissions increase instead. The research conclusions can provide the decision support and policy direction for policies related to China's carbon market.