Does China's green power trading policy play a role? - Evidence from renewable energy generation enterprises

Green power trading is an institutional innovation proposed by China to promote green and sustainable development. This policy aims to relieve the serious debt pressure of renewable energy generation enterprises, thus laying the foundation for achieving carbon reduction targets. This paper empirically examines the role of green power trading by constructing the difference-in-differences (DID) model. Our findings indicate that green power trading significantly reduces the debt levels of policy-covered generation enterprises. This effect is more pronounced for state-owned enterprises, companies with better ESG performance, companies in regions with higher degree of marketization and companies specializing in renewable energy power generation. Further research discusses the impact mechanism of green power trading in terms of external and internal environmental channels. We find that a strong green development atmosphere, especially the external atmosphere, will significantly reinforce the weakening effect of green power trading on corporate debt. Our research provides empirical evidence for the success of green power trading policy in its pilot phase.