Can Emission Trading Scheme Improve Carbon Emission Performance? Evidence From China

Abstract

This paper explores the effect of China’s emission trading scheme (ETS) pilot policy implemented during 2013-2014 on carbon emission performance. Adopting the Difference-in-Difference (DID) model, we find that: 1) China’s ETS pilot policy can significantly improve the carbon emission performance of listed companies in the pilot provinces. 2) The heterogeneity analysis shows that the carbon emission performance of listed companies in the eastern coastal pilot areas has improved significantly, which is not significant in the central and western pilot areas. 3) We find that China’s ETS pilot policy can significantly improve innovation capabilities of listed companies, suggesting that innovation is a channel for the impact of the China’s ETS pilot policy on carbon emission performance in the pilot provinces. Overall, our study shows that ETS pilot policy has played a governance role in China and improved carbon emission performance. We further highlight some important policy implications with respect to helping companies save energy and reduce emissions, and promoting the further improvement of China’s ETS pilot policy.

Can the Target Responsibility System of Air Pollution Control Achieve a Win-Win Situation of Pollution Reduction and Efficiency Enhancement?

“…This paper has made contributions to the existing literature in the following three aspects: First, there is still no consensus as to whether the environmental target responsibility system can realize the coordinated development of the economy and ecology (Kostka, 2016;Yuan and Xiang, 2018;Chang et al, 2021;Zheng et al, 2021). Based on the APCMS policy implemented in China, this paper confirms that the policy achieves a win-win situation of pollution reduction and efficiency improvement.…”

“…Since the formulation of environmental protection targets is from top to bottom, and the upper-level government assesses and supervises the implementation of environmental goals of local government officials, the environmental target responsibility system is a typical mandatory environmental regulation. Its pollutant emission reduction effect has been demonstrated by many scholars (Calel and Dechezleprêtre, 2016;Wu et al, 2019;Zheng et al, 2021). However, some scholars still question whether the effects of mandatory environmental regulations are sustainable.…”

The Effect of China's Pilot Low-Carbon City Initiative on Enterprise Labor Structure

“…After nearly 10 years of exploration and development, at the macro-level, achievements have been made in the adjustment of industrial structure, optimization of energy mix, and the awakening of public awareness. Zheng et al (2021b) previously research the impact of China's ETS pilot policy on enterprises, and prove that China's ETS pilot policy can significantly improve the carbon emission performance of listed companies in the pilot provinces. Meanwhile, Zheng et al (2021b) also find that innovation is a channel for the impact of China's ETS pilot policy on carbon emission performance in the pilot provinces.…”

“…Zheng et al (2021b) previously research the impact of China's ETS pilot policy on enterprises, and prove that China's ETS pilot policy can significantly improve the carbon emission performance of listed companies in the pilot provinces. Meanwhile, Zheng et al (2021b) also find that innovation is a channel for the impact of China's ETS pilot policy on carbon emission performance in the pilot provinces. Therefore, we continue to study the effect of the pilot low-carbon city initiative at the microlevel.…”

Does the Carbon Emissions Trading Policy Increase Corporate Tax Avoidance? Evidence from China

“…By internalizing the external emission cost into the production cost of firms, the establishment of a carbon emission trading system provides a compelling incentive for carbon emission reduction. Specifically, it reduces the total carbon emission and improves the carbon emission performance of firms (Zhang et al, 2019;Xuan et al, 2020;Zheng et al, 2021;Dong et al, 2022).…”