A green path towards sustainable development: The impact of carbon emissions trading system on urban green transformation development

Abstract

This study aims to explore the direct and indirect impacts of the Carbon Emission Trading System (CETS) on the green transition development (GTD) of Chinese cities. This paper constructs a GTD evaluation system from the perspective of prevention and governance at the source, in terms of carbon reduction, pollution reduction, green expansion and growth, and measures the GTD performance of 281 cities based on the EW-TOPSIS model. It is found that the average increase in GTD of the sample cities from 2006 to 2020 is 3.40 %, the GTD progress of the 281 cities has a considerable positive spatial autocorrelation, with the GTD progress of the CETS pilot cities being significantly bigger than that of the non-pilot cities. Further this paper adopts the spatial difference model (S-DID) to scientifically identify the influence mechanism and heterogeneity of the direct and spatial effects of CETS on city GTD, and the results show that CETS has a positive effect on the GTD of both local and neighboring cities. Propensity score matching (PSM) is used to further corroborate these findings. The study also shows that CETS improves local GTD by promoting green innovation, rationalizing industrial structures, and enhancing energy efficiency in cities. Nevertheless, the ensuing siphon effect hinders nearby cities' levels of energy efficiency, industrial structure rationalization, and green innovation. The policy effects of CETS are more significant in large cities, eastern cities, old industrial areas, and non-resource-based cities. CETS can work in synergy with smart city construction, low-carbon city pilot policies, and emission trading policies to accelerate the process of GTD.