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Can emission trading help to improve energy efficiency in China?

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Abstract

This paper investigates whether the operation of emission trading scheme (ETS) helps to improve energy efficiency in China. Stochastic frontier analysis is used to estimate energy efficiency at province level and sector levels, and the difference-in-differences technique is applied to assess the effectiveness of emission trading. The main findings are as follows: (1) energy efficiency may be underestimated if control variables are taken no account in efficiency estimation; (2) the diversity of energy efficiency is rather high across different provinces or sectors, and (3) ETS is not as effective for energy efficiency improvement as supposed, but its stimulation effect on provincial energy efficiency is prominently positive. It is suggested that it might be more appropriate to implement ETS program in industry or transport sector than in various sectors throughout the country.

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Notes

  1. Due to data availability of the control variables, five provinces are removed from our samples in model 2 and model 3, i.e., Shanxi, Inner Mongolia, Guizhou, Shaanxi, and Ningxia, respectively. Therefore, the comparison of estimation results contains 25 provinces in Figure 1.

  2. Due to data availability of variables, three provinces are removed from our samples in construction sector, i.e., Heilongjiang, Guangxi and Hainan, respectively. Therefore, the estimation results of energy efficiency in construction sector contain 27 provinces.

  3. Due to data availability of variables, two provinces are removed from our samples in transport sector, i.e., Henan and Hainan, respectively. Therefore, the estimation results of energy efficiency in transport sector contain 28 provinces.

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Acknowledgements

This study is financially supported by the National Social Science Fund of China (no. 17BGL251).

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Authors and Affiliations

  1. College of Economics and Management, Nanjing University of Aeronautics and Astronautics, 29 Jiangjun Avenue, Nanjing, China

    Hui Zhang

  2. School of Economics and Management, China University of Petroleum, Qingdao, 266580, China

    Li-Wei Fan

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  1. Hui Zhang
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Correspondence to Li-Wei Fan.

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Zhang, H., Fan, LW. Can emission trading help to improve energy efficiency in China?. Energy Efficiency 12, 979–991 (2019). https://doi.org/10.1007/s12053-018-9735-4

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  • DOI: https://doi.org/10.1007/s12053-018-9735-4

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