Skip to main content
SpringerLink
Log in

How does emission trade scheme affect green total factor productivity: perspectives of efficiency decomposition and mediating effects

  • Original Article
  • Published:
Journal of Data, Information and Management Aims and scope Submit manuscript

Abstract

Environmental deterioration has become the primary issue restricting sustainable economic development, and the carbon trading system is one of the most effective tools for market-based emission reduction. China, a significant carbon emitter, has garnered attention from scholars for its pilot carbon trading mechanism. This has sparked extensive controversy in various studies, mainly focusing on the effectiveness and impact mechanisms of China’s pilot carbon trading. The existing carbon trading pilot is ineffective, and the impact of carbon trading on the region’s economy and environment remains unclear. Therefore, our study delves into the mediating variables influencing the impact of carbon trading on urban green development, with the intention of elucidating effective avenues for policy intervention. We compiled a panel dataset encompassing 241 Chinese cities from 2006 to 2019. Using the Difference-in-Differences (DID) method, we substantiated that the impact of Emissions Trading System (ETS) on urban Green Total Factor Productivity (GTFP) was primarily driven by technological shifts. The effect of the ETS on GTFP exhibited a positive trend (9.23%), also manifesting positive influence on technological transformation (8.64%), thereby confirming the Porter hypothesis from an efficiency decomposition perspective.Furthermore, employing a multi-mediation model, we dissected the effects of the ETS on GTFP, examining the facets of technological, structural, and scale effects. Research results in indicate that there is a mediating relationship between green technology innovation and industrial structure upgrade in this efficiency, i.e. ETS can achieve the improvement of GTFP by promoting green technology innovation and structure upgrade. These findings form the foundation for policy recommendations aimed at refining the national carbon market.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

References

  • Abidin Z, Prabantarikso RM, Wardhani RA, Endri E (2021) Analysis of bank efficiency between conventional banks and regional development banks in indonesia. J Asian Finance Econ Bus 8(1):741–750

    Google Scholar 

  • Acemoglu D, Angrist JD (2001) Consequences of employment protection? the case of the americans with disabilities act. J Polit Econ 109(5):915–957

    Article  Google Scholar 

  • Adom PK, Bekoe W, Amuakwa-Mensah F, Mensah JT, Botchway E (2012) Carbon dioxide emissions, economic growth, industrial structure, and technical efficiency: empirical evidence from ghana, senegal, and morocco on the causal dynamics. Energy 47(1):314–325

    Article  Google Scholar 

  • Anderson BJ, Di Maria C (2010) Abatement and allocation in the pilot phase of the eu ets

  • Baron RM, Kenny DA (1986) The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. J Pers Soc Psychol 51(6):1173

    Article  Google Scholar 

  • Calel R, Dechezleprêtre A (2016) Environmental policy and directed technological change: evidence from the european carbon market. Rev Econ Stat 98(1):173–191

    Article  Google Scholar 

  • Callaway B, Sant’Anna PH (2021) Difference-in-differences with multiple time periods. J Econom 225(2):200–230

    Article  MathSciNet  Google Scholar 

  • Cao X, Deng M, Li H (2021) How does e-commerce city pilot improve green total factor productivity? evidence from 230 cities in china. J Environ Manage 289:112520

    Article  Google Scholar 

  • Chakraborty P, Chatterjee C (2017) Does environmental regulation indirectly induce upstream innovation? new evidence from india. Res Policy 46(5):939–955

    Article  Google Scholar 

  • Chen Z, Zhang X, Chen F (2021) Do carbon emission trading schemes stimulate green innovation in enterprises? evidence from china. Technol Forecast Soc Chang 168:120744

    Article  Google Scholar 

  • Chetty R, Looney A, Kroft K (2009) Salience and taxation: theory and evidence. Am Econ Rev 99(4):1145–1177

    Article  Google Scholar 

  • Chung YH, Färe R, Grosskopf S (1997) Productivity and undesirable outputs: a directional distance function approach. J Environ Manage 51(3):229–240

    Article  Google Scholar 

  • Copeland BR, Taylor MS (2004) Trade, growth, and the environment. J Econ Lit 42(1):7–71

    Article  Google Scholar 

  • Dagar V, Khan MK, Alvarado R, Rehman A, Irfan M, Adekoya OB, Fahad S (2022) Impact of renewable energy consumption, financial development and natural resources on environmental degradation in oecd countries with dynamic panel data. Environ Sci Pollut Res 29(12):18202–18212

    Article  Google Scholar 

  • Dales JH (1968) Pollution, property and prices: an essay in policy-making and economics. Edward Elgar Pub

  • De Beule F, Schoubben F, Struyfs K (2022) The pollution haven effect and investment leakage: the case of the eu-ets. Econ Lett 215:110536

    Article  Google Scholar 

  • Dechezleprêtre A, Nachtigall D, Venmans F (2023) The joint impact of the european union emissions trading system on carbon emissions and economic performance. J Environ Econ Manag 118:102758

    Article  Google Scholar 

  • Dong F, Dai Y, Zhang S, Zhang X, Long R (2019) Can a carbon emission trading scheme generate the porter effect? evidence from pilot areas in china. Sci Total Environ 653:565–577

    Article  Google Scholar 

  • Dong B, Xu Y, Fan X (2020) How to achieve a win-win situation between economic growth and carbon emission reduction: empirical evidence from the perspective of industrial structure upgrading. Environ Sci Pollut Res 27:43829–43844

    Article  Google Scholar 

  • Du S, Zhu Y, Zhu Y, Tang W (2020) Allocation policy considering firm’s time-varying emission reduction in a cap-and-trade system. Ann Oper Res 290:543–565

    Article  MathSciNet  Google Scholar 

  • Du K, Cheng Y, Yao X (2021) Environmental regulation, green technology innovation, and industrial structure upgrading: the road to the green transformation of chinese cities. Energy Econ 98:105247

    Article  Google Scholar 

  • Fan JH, Todorova N (2017) Dynamics of china’s carbon prices in the pilot trading phase. Appl Energy 208:1452–1467

    Article  Google Scholar 

  • Fan X, Lv X, Yin J, Tian L, Liang J (2019) Multifractality and market efficiency of carbon emission trading market: analysis using the multifractal detrended fluctuation technique. Appl Energy 251:113333

    Article  Google Scholar 

  • Feng Z, Chen W (2018) Environmental regulation, green innovation, and industrial green development: an empirical analysis based on the spatial durbin model. Sustainability 10(1):223

    Article  MathSciNet  Google Scholar 

  • Feng Y, Wang X, Liang Z, Hu S, Xie Y, Wu G (2021) Effects of emission trading system on green total factor productivity in china: empirical evidence from a quasi-natural experiment. J Clean Prod 294:126262

    Article  Google Scholar 

  • Gao Y, Li M, Xue J, Liu Y (2020) Evaluation of effectiveness of china’s carbon emissions trading scheme in carbon mitigation. Energy Econ 90:104872

    Article  Google Scholar 

  • Grossman GM, Krueger AB (1995) Economic growth and the environment. Q J Econ 110(2):353–377

    Article  Google Scholar 

  • Hou B, Wang B, Du M, Zhang N (2020) Does the so 2 emissions trading scheme encourage green total factor productivity? an empirical assessment on china’s cities. Environ Sci Pollut Res 27:6375–6388

  • Ji C-J, Hu Y-J, Tang B-J, Qu S (2021) Price drivers in the carbon emissions trading scheme: evidence from chinese emissions trading scheme pilots. J Clean Prod 278:123469

    Article  Google Scholar 

  • Jiakui C, Abbas J, Najam H, Liu J, Abbas J (2023) Green technological innovation, green finance, and financial development and their role in green total factor productivity: empirical insights from china. J Clean Prod 382:135131

    Article  Google Scholar 

  • Jiang C, Ma X (2019) The impact of financial development on carbon emissions: a global perspective. Sustainability 11(19):5241

    Article  Google Scholar 

  • Jorgenson DW, Wilcoxen PJ (1990) Environmental regulation and us economic growth. Rand J Econ, 314–340

  • Khan MK, Babar SF, Oryani B, Dagar V, Rehman A, Zakari A, Khan MO (2022) Role of financial development, environmental-related technologies, research and development, energy intensity, natural resource depletion, and temperature in sustainable environment in canada. Environ Sci Pollut Res 29:622–638

    Article  Google Scholar 

  • Li J, Tang D, Tenkorang AP, Shi Z (2021) Research on environmental regulation and green total factor productivity in yangtze river delta: from the perspective of financial development. Int J Environ Res Public Health 18(23):12453

    Article  Google Scholar 

  • Li C, Qi Y, Liu S, Wang X (2022) Do carbon ets pilots improve cities’ green total factor productivity? evidence from a quasi-natural experiment in china. Energy Econ 108:105931

    Article  Google Scholar 

  • Li Y, Hu H, Wang L (2023) How does mandatory energy conversion affect sustainable development: perspectives of regional heterogeneity and efficiency decomposition. J Environ Manage 331:117279

    Article  Google Scholar 

  • Lin B, Benjamin NI (2017) Green development determinants in china: a non-radial quantile outlook. J Clean Prod 162:764–775

    Article  Google Scholar 

  • Lin B, Huang C (2022) Analysis of emission reduction effects of carbon trading: market mechanism or government intervention? Sustain Prod Consum 33:28–37

    Article  Google Scholar 

  • Litterman B (2013) What is the right price for carbon emissions. Regulation 36:38

    Google Scholar 

  • Liu Z, Xin L (2019) Has china’s belt and road initiative promoted its green total factor productivity?—evidence from primary provinces along the route. Energy Policy 129:360–369

    Article  Google Scholar 

  • Liu Y, Zhou Y, Wu W (2015) Assessing the impact of population, income and technology on energy consumption and industrial pollutant emissions in china. Appl Energy 155:904–917

    Article  Google Scholar 

  • Liu J, Cheng Z, Zhang H (2017) Does industrial agglomeration promote the increase of energy efficiency in china? J Clean Prod 164:30–37

    Article  Google Scholar 

  • Liu Y, Yang Y, Li H, Zhong K (2022) Digital economy development, industrial structure upgrading and green total factor productivity: empirical evidence from china’s cities. Int J Environ Res Public Health 19(4):2414

    Article  Google Scholar 

  • Löschel A, Lutz BJ, Managi S (2019) The impacts of the eu ets on efficiency and economic performance–an empirical analyses for german manufacturing firms. Resour Energy Econ 56:71–95

    Article  Google Scholar 

  • Lu L, Zheng H, Chen M, Najam H et al (2022) Tackling carbon intensity with green finance in the covid-19-era: recommendations for oecd economies. Climate Change Economics (CCE) 13(03):1–22

    Google Scholar 

  • Luo Y, Mensah CN, Lu Z, Wu C (2022) Environmental regulation and green total factor productivity in china: a perspective of porter’s and compliance hypothesis. Ecol Ind 145:109744

    Article  Google Scholar 

  • Lv C, Bian B, Lee C-C, He Z (2021) Regional gap and the trend of green finance development in china. Energy Econ 102:105476

    Article  Google Scholar 

  • Lv C, Shao C, Lee C-C (2021) Green technology innovation and financial development: do environmental regulation and innovation output matter? Energy Econ 98:105237

    Article  Google Scholar 

  • Mo J-L, Agnolucci P, Jiang M-R, Fan Y (2016) The impact of chinese carbon emission trading scheme (ets) on low carbon energy (lce) investment. Energy Policy 89:271–283

    Article  Google Scholar 

  • Munnings C, Morgenstern RD, Wang Z, Liu X (2016) Assessing the design of three carbon trading pilot programs in china. Energy Policy 96:688–699

    Article  Google Scholar 

  • Nawaz MA, Seshadri U, Kumar P, Aqdas R, Patwary AK, Riaz M (2021) Nexus between green finance and climate change mitigation in n-11 and brics countries: empirical estimation through difference in differences (did) approach. Environ Sci Pollut Res 28:6504–6519

    Article  Google Scholar 

  • Newell RG, Pizer WA, Raimi D (2014) Carbon markets: past, present, and future. Annu Rev Resour Econ 6(1):191–215

    Article  Google Scholar 

  • Olalere O, Islam M, Yusoff W, Ariffin K, Kamruzzaman M (2021) The moderating role of financial innovation on financial risks, business risk and firm value nexus: Empirical evidence from nigeria. In: AIP Conference proceedings, vol 2339. AIP Publishing LLC, p 020108

  • Porter M (1996) America’s green strategy. Business and the environment: a reader 33:1072

    Google Scholar 

  • Porter ME, Cvd Linde (1995) Toward a new conception of the environment-competitiveness relationship. J Econ Perspect 9(4):97–118

    Article  Google Scholar 

  • Qi S, Cheng S, Cui J (2021) Environmental and economic effects of china’s carbon market pilots: empirical evidence based on a did model. J Clean Prod 279:123720

    Article  Google Scholar 

  • Rogge KS, Schneider M, Hoffmann VH (2011) The innovation impact of the eu emission trading system—findings of company case studies in the german power sector. Ecol Econ 70(3):513–523

    Article  Google Scholar 

  • Rubashkina Y, Galeotti M, Verdolini E (2015) Environmental regulation and competitiveness: empirical evidence on the porter hypothesis from european manufacturing sectors. Energy Policy 83:288–300

    Article  Google Scholar 

  • Sadiq M, Amayri MA, Paramaiah C, Mai NH, Ngo TQ, Phan TTH (2022) How green finance and financial development promote green economic growth: deployment of clean energy sources in south asia. Environ Sci Pollut Res 29(43):65521–65534

    Article  Google Scholar 

  • Schleussner C-F, Rogelj J, Schaeffer M, Lissner T, Licker R, Fischer EM, Knutti R, Levermann A, Frieler K, Hare W (2016) Science and policy characteristics of the paris agreement temperature goal. Nat Clim Chang 6(9):827–835

    Article  Google Scholar 

  • Shen F, Liu B, Luo F, Wu C, Chen H, Wei W (2021) The effect of economic growth target constraints on green technology innovation. J Environ Manage 292:112765

    Article  Google Scholar 

  • Song M, Tao J, Wang S (2015) Fdi, technology spillovers and green innovation in china: analysis based on data envelopment analysis. Ann Oper Res 228:47–64

    Article  Google Scholar 

  • Tian Y, Pang J (2022) The role of internet development on green total-factor productivity—an empirical analysis based on 109 cities in yangtze river economic belt. J Clean Prod 378:134415

    Article  Google Scholar 

  • Wang L, Watanabe T (2019) Effects of environmental policy on public risk perceptions of haze in tianjin city: a difference-in-differences analysis. Renew Sustain Energy Rev 109:199–212

    Article  Google Scholar 

  • Wang H, Chen Z, Wu X, Nie X (2019) Can a carbon trading system promote the transformation of a low-carbon economy under the framework of the porter hypothesis?—empirical analysis based on the psm-did method. Energy Policy 129:930–938

    Article  Google Scholar 

  • Wang H, Cui H, Zhao Q (2021) Effect of green technology innovation on green total factor productivity in china: evidence from spatial durbin model analysis. J Clean Prod 288:125624

    Article  Google Scholar 

  • Wang S, Chen G, Han X (2021) An analysis of the impact of the emissions trading system on the green total factor productivity based on the spatial difference-in-differences approach: the case of china. Int J Environ Res Public Health 18(17):9040

    Article  Google Scholar 

  • Wang H, Shi W, He Y, Dong J (2022) Spill-over effect and efficiency of seven pilot carbon emissions trading exchanges in china. Sci Total Environ 838:156020

    Article  Google Scholar 

  • Wooldridge JM (2010) Econometric analysis of cross section and panel data. MIT press, ???

  • Wu Q (2022) Price and scale effects of china’s carbon emission trading system pilots on emission reduction. J Environ Manage 314:115054

    Article  Google Scholar 

  • Xie R, Fu W, Yao S, Zhang Q (2021) Effects of financial agglomeration on green total factor productivity in chinese cities: insights from an empirical spatial durbin model. Energy Econ 101:105449

    Article  Google Scholar 

  • Xuan D, Ma X, Shang Y (2020) Can china’s policy of carbon emission trading promote carbon emission reduction? J Clean Prod 270:122383

    Article  Google Scholar 

  • Yan Y, Zhang X, Zhang J, Li K (2020) Emissions trading system (ets) implementation and its collaborative governance effects on air pollution: the china story. Energy Policy 138:111282

    Article  Google Scholar 

  • Yu P, Hao R, Cai Z, Sun Y, Zhang X (2022) Does emission trading system achieve the win-win of carbon emission reduction and financial performance improvement?—evidence from chinese a-share listed firms in industrial sector. J Clean Prod 333:130121

    Article  Google Scholar 

  • Zang J, Wan L, Li Z, Wang C, Wang S (2020) Does emission trading scheme have spillover effect on industrial structure upgrading? evidence from the eu based on a psm-did approach. Environ Sci Pollut Res 27:12345–12357

    Article  Google Scholar 

  • Zhang Y-J, Liu Z, Zhang H, Tan T-D (2014) The impact of economic growth, industrial structure and urbanization on carbon emission intensity in china. Nat Hazards 73:579–595

    Article  Google Scholar 

  • Zhang L, Cao C, Tang F, He J, Li D (2019a) Does china’s emissions trading system foster corporate green innovation? evidence from regulating listed companies. Technol Anal Strateg Manag 31(2):199–212

  • Zhang G, Zhang P, Zhang ZG, Li J (2019b) Impact of environmental regulations on industrial structure upgrading: an empirical study on beijing-tianjin-hebei region in china. J Clean Prod 238:117848

    Article  Google Scholar 

  • Zhang Y, Li S, Luo T, Gao J (2020) The effect of emission trading policy on carbon emission reduction: evidence from an integrated study of pilot regions in china. J Clean Prod 265:121843

    Article  Google Scholar 

  • Zhang S, Wang Y, Hao Y, Liu Z (2021) Shooting two hawks with one arrow: could china’s emission trading scheme promote green development efficiency and regional carbon equality? Energy Econ 101:105412

    Article  Google Scholar 

  • Zhang C, Khan I, Dagar V, Saeed A, Zafar MW (2022) Environmental impact of information and communication technology: unveiling the role of education in developing countries. Technol Forecast Soc Chang 178:121570

    Article  Google Scholar 

  • Zhao M, Liu F, Sun W, Tao X (2020) The relationship between environmental regulation and green total factor productivity in china: An empirical study based on the panel data of 177 cities. Int J Environ Res Public Health 17(15):5287

    Article  Google Scholar 

  • Zhao X, Ma X, Chen B, Shang Y, Song M (2022) Challenges toward carbon neutrality in china: strategies and countermeasures. Resour Conserv Recycl 176:105959

    Article  Google Scholar 

  • Zhou F, Wang X (2022) The carbon emissions trading scheme and green technology innovation in china: a new structural economics perspective. Econ Anal Policy 74:365–381

    Article  Google Scholar 

  • Zhou B, Zhang C, Wang Q, Zhou D (2020) Does emission trading lead to carbon leakage in china? direction and channel identifications. Renew Sustain Energy Rev 132:110090

    Article  Google Scholar 

Download references

Acknowledgements

The authors are grateful for financial support from National Natural Science Foundation youth project(Grant No. 72301259).

Author information

Authors and Affiliations

  1. School of Management, University of Science and Technology of China, Hefei, People’s Republic of China

    Jinzhe Liu

  2. International Institute of Finance, University of Science and Technology of China, Hefei, People’s Republic of China

    Lizheng Wang

Authors
  1. Jinzhe Liu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Lizheng Wang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jinzhe Liu.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

A   Appendix

A   Appendix

1.1 A.1   Table

Table 8 Heterogeneity analysis: North China
Full size table
Table 9 Heterogeneity analysis: East China
Full size table
Table 10 Heterogeneity analysis: Central China
Full size table
Table 11 Heterogeneity analysis: South China
Full size table

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Liu, J., Wang, L. How does emission trade scheme affect green total factor productivity: perspectives of efficiency decomposition and mediating effects. J. of Data, Inf. and Manag. (2024). https://doi.org/10.1007/s42488-024-00123-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s42488-024-00123-2

Keywords

Search

Navigation