The spatial spillover effect of China?s carbon emissions trading policy on industrial carbon intensity: Evidence from a spatial difference-in-difference method

The carbon emissions trading (CET) market has been viewed as an effective way to improve CO2 emissions performance against the background of achieving China's carbon neutrality before 2060. This study investigates the spatial spillover effects of the CET policy on industrial carbon intensity reduction by developing spatial difference-in-differences (SDID) models. Then, a mediating effect model is used to test whether technological progress is a mediating variable of the spillover effects of the CET policy. The results show that the CET policy has negative spatial spillover effects, implying that the local CET policy has significantly reduced the industrial carbon intensity in the surrounding area. Technological progress is confirmed to be a mediating variable by which the CET policy reduces carbon intensity in the surrounding area. Hence, we suggest establishing a unified CET system including all industries with high emissions in China, and upgrading the low carbon technologies as soon as possible.

Automated summary

The study found that differentiated carbon emissions trading policies can have negative spatial spillover effects on industrial carbon intensity reduction in surrounding areas, with technological progress playing a mediating role. Therefore, it is recommended to establish a unified carbon emissions trading system and upgrade low-carbon technologies as soon as possible.