China's carbon emissions trading system (ETS) helps the country slow down industrial solid waste accumulation

Industrial solid waste generation in China remains a major environmental challenge. While the cap-and-trade carbon emissions trading system (ETS) is designed primarily to mitigate climate change through carbon pricing, its potential to affect the generation of industrial solid waste - a pervasive environmental pollutant and an important source of greenhouse gas emissions - remains a critical yet under-explored empirical question. This study bridges this gap by investigating the impact of China's carbon ETS on the generation of general (i.e., non-hazardous) industrial solid waste (GISW) and hazardous industrial solid waste (HISW). Using a provincial panel dataset for 31 mainland Chinese provinces from 2001 to 2020, including measures of HISW and GISW generation, ETS policy timing, and key socioeconomic, climate, and regulatory covariates, we employ a difference-in-differences approach to evaluate the policy effect. The results indicate that the carbon ETS significantly reduces the scale, intensity, and per-employee levels of both GISW and HISW. Compared to the non-ETS regions, on average, the ETS leads to an approximately 40% reduction in industrial solid waste generation in the policy-regulated regions. Further mechanism analysis reveals that the ETS promotes investment in industrial solid waste abatement, boosts R&D, and reduces energy use, which together improve resource efficiency and reduce process-related solid waste generation. These findings provide a plausible explanation for the observed effect of the ETS in reducing industrial solid waste. Our findings reveal that the carbon ETS can serve as a potent policy instrument for addressing a broader spectrum of industrial pollution beyond its primary carbon-cutting goal.Implications: This study reveals that the carbon ETS can serve as a potent policy instrument for addressing a broader spectrum of industrial pollution beyond its primary carbon-cutting goal. To strategically strengthen the identified pathways through which the ETS mitigates industrial solid waste, a complementary policy mix is essential. This should include measures to lower financing barriers for waste treatment upgrades, incentivize R&D and technological progress, and support energy efficiency projects alongside carbon trading.