Can an emission trading policy promote green transformation of regional economies?: evidence from China

Abstract

To promote the green development of the global economy and solve the global energy and climate problems, the green transformation of the regional economy is the only way to solve development challenges. Carbon emission trading policies, as an important market mechanism for promoting carbon emission reduction, can further promote green economic development. This study takes the pilot carbon emission trading policy in China as a natural experiment to explore the impact of the carbon emission trading policy on the green transformation of the regional economy and its mechanism. This study accurately measures the efficiency of green transformation of the regional economy. The empirical results indicate that the carbon emission trading policy can promote the green transformation of the regional economy; carbon emission trading policies affect the green transformation of the regional economy through energy structure, urbanization level, and the interaction between energy structure and urbanization level; the model results are robust. Moreover, due to regional differences in original resource endowments, the effect of carbon emission trading policy on regional economic green transformation presents heterogeneity. Therefore, certain policy recommendations can promote the green development of the regional economy, which has important implications for interdisciplinary research, solving energy and climate problems, and high-quality growth of the world economy.

The Green Engine of Growth: Assessing the Influence of Renewable Energy Consumption and Environmental Policy on China’s Economic Sustainability

“…In parallel, studies by Chen et al [6] and Jiang et al [191] underscore the transformative potential of stringent environmental policies in catalyzing industrial innovation and efficiency, thereby charting a path to sustainability. Moreover, analyses by Shahid et al [192] and Qian and Zhou [193] articulate foreign direct investment's dual role in capital infusion and the propagation of green technologies, marking it as instrumental in achieving environmental sustainability goals. Furthermore, investigations by Qing et al [194] and Bakhsh et al [195] elucidate the critical contributions of trade openness and financial sector maturity to China's sustainability efforts, highlighting how these factors enhance resource allocation efficiency and provide essential funding for sustainable initiatives.…”