Call for multi-policy approach: Synergistic effects of emissions trading scheme and energy efficiency policies

Limited research exists on the synergistic effects of carbon emissions trading and energy efficiency policies despite their significance in achieving global carbon neutrality objectives. This study examines the synergistic effects of carbon emissions trading and energy efficiency policies on aspects of the environment, energy, and economy. Results show that the synergistic effect leads to an additional reduction of 1.2% in carbon emissions, along with a decrease of 4.2% in economic losses. Despite challenges like increased energy external dependency and carbon leakage, the synergistic effect shows a positive externality between policies, reducing the carbon intensity and marginal emission mitigation costs. Furthermore, these synergistic effects yield positive consequences for social welfare, particularly benefiting rural households and fostering equitable distribution of carbon mitigation benefits across societal groups. These findings underscore the importance of considering policy synergies between carbon emissions trading and energy efficiency policies to ensure the total effect of climate change mitigation strategies.