The impact of carbon emissions trading on energy efficiency: Evidence from quasi-experiment in China?s carbon emissions trading pilot

The improvement of energy efficiency can solve the dual problems of increasing energy demand and low-carbon transition, so as to achieve China's energy conservation, emission reduction and green development goals. Studying the impact of the carbon emissions trading scheme on energy efficiency will provide empirical evidence for the institutional dividends of market-oriented environmental regulations in promoting the construction of ecological civilization. This study, with 276 cities in China from 2003 to 2016 as a sample, used a Difference-in-Differences Model to assess the impact of carbon emissions trading on energy efficiency. The study found that after overcoming endogenous issue and passing a series of robustness tests, the carbon emissions trading scheme can significantly improve the single-factor and total-factor energy efficiency of cities through green innovation and resource allocation channels. The analysis of heterogeneity showed that high marketization and industrial agglomeration can help the carbon emissions trading scheme to improve energy efficiency.

Automated summary

This study examines the impact of carbon emissions trading on energy efficiency and finds that it can significantly improve energy efficiency in cities, particularly in areas with high marketization and industrial agglomeration.