Abstract
An emission trading system (ETS) is a powerful emission reduction tool for achieving low-carbon economic development in the world. Focusing on the industrial subsectors, this paper comprehensively analyzes the environmental and economic effects of the pilot ETS in China from the perspectives of economic development, technological optimization, and innovation-driven development by using the propensity score matching–difference in differences (PSM-DID) model based on 2005–2017 provincial panel data. This paper compensates for the limitations of existing studies on the effects of ETS on different subsectors; furthermore, the triple difference model (DDD) model is used to discuss the impacts of differences in environmental responsibility and economic potential among subsectors on policy effects. The empirical results show that: (1) The pilot ETS produces a 14.5% carbon reduction effect on the covered subsectors while reducing GDP by 4.8% without achieving a low-carbon economy. Thus, production decline is the main reason for carbon emission reductions. (2) Economic development factors have significant positive impacts on carbon emissions, while technological optimization and innovation-driven development are key factors for achieving reductions in carbon emissions. (3) The pilot ETS produces a 60.1% carbon emission inhibition effect and 23.2% GDP inhibition effect on the subsectors with greater environmental responsibility. Therefore, the Chinese government should fully simulate the impact of technological innovation and utilize resource endowment differences in the environmental and economic aspects of different sectors to achieve low-carbon economic development.
Highlights
Global climate change poses a major environmental threat to the sustainable development of society, while the main cause is excessive greenhouse gas emissions
A comprehensive analysis of the environmental and economic effects of industrial subsectors covered by the pilot emission trading system (ETS) was conducted by using the propensity score matching–difference in differences (PSM-DID) model
In the early stage of the pilot ETS in China, the carbon emissions of the included industrial subsectors were significantly reduced, by 14.5%, by adding key control variables to exclude the interference from other policies while the GDP fell by 4.8%; the policy effects remained robust during the experimental period, and the pilot ETS did not achieve the development of a low-carbon economy
Summary
Global climate change poses a major environmental threat to the sustainable development of society, while the main cause is excessive greenhouse gas emissions. This raises the question of whether the industrial subsectors covered by China’s ETS can achieve a win-win situation for the environment and the economy by promoting technological optimization and innovation-driven development To answer this question, the limited literature, which discussed the policy effects of ETS in specific coverage sectors, mainly began at the enterprise and subsector levels. Focusing on the panel data of inter-provincial industrial subsectors from 2005 to 2015, Zhang and Duan used the DID model to select the output, state-owned asset ratios, fixed asset ratios, and profitability as control variables to discuss the effects of ETS on the total output and employment of industrial subsectors Their conclusion is noteworthy in that the pilot ETS significantly reduced GDP and would lead to significant employment declines in related subsectors, but would not produce a “decoupling” of carbon emissions and GDP in the short term [30].
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