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Investigating the Impact of Carbon Emission Trading on Industrial Carbon Productivity in China

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Carbon-Neutral Pathways for China: Economic Issues

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Abstract

Carbon productivity should be a key indicator to evaluate the effectiveness of emissions trading system (ETS) since it shows the dynamics between carbon reductions and economic growth. This chapter conducts a quasi-natural experiment by using the DDD approach to empirically investigate the impact of China’s pilot ETS on industrial carbon productivity. A provincial industrial-level dataset, which contains the information of economic variables and carbon emissions from 2008 to 2017, is analysed. The results confirm that there exists a significantly positive casual nexus between the pilot ETS and industrial carbon productivity. This outcome remains robust through the placebo and concurrent policy tests. Moreover, the promotion effect of Beijing ETS is significantly larger while that of Chongqing ETS is significantly smaller than the average level. Among ETS-covered industries, petrochemical industry experienced the largest promotion effect, followed by electric power industry. In addition, enhancing technological progress and increasing capital investment can explain the observed promotion effect. In general, China’s pilot ETS has contributed to the country’s industrial carbon productivity improvement.

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Notes

  1. 1.

    http://www.stats.gov.cn/tjsj/tjbz/hyflbz/201905/P020190716349644060705.pdf.

  2. 2.

    https://ourworldindata.org/energy/country/china.

  3. 3.

    https://www.bloomberg.com/news/articles/2022-05-31/china-seen-adding-more-sectors-to-carbon-market-in-2024.

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  1. School of Mathematics and Statistics, Guangdong University of Foreign Studies, Guangzhou, 510006, China

    Di Zhou

  2. School of Economics and Trade, Guangdong University of Foreign Studies, Guangzhou, 510006, China

    Kai Tang

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  1. Guangdong University of Foreign Studies, Guangzhou, China

    Kai Tang

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Zhou, D., Tang, K. (2023). Investigating the Impact of Carbon Emission Trading on Industrial Carbon Productivity in China. In: Tang, K. (eds) Carbon-Neutral Pathways for China: Economic Issues. Springer, Singapore. https://doi.org/10.1007/978-981-19-5562-4_9

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