How does the carbon market impact the economy-energy-environment system in resource-based regions of China? Empirical evidence from Shanxi Province

Abstract

The question of whether carbon markets increase regional inequality has led to widespread discussion. Resource-based regions with carbon-intensive industries face the dual pressure of transformation and carbon reduction and are more sensitive to the carbon market. In this study, Shanxi Province, a typical resource-based province in China, was selected as the research object, and a system dynamics model of the carbon trading market was constructed to identify the impact of the carbon market on the economy-energy-environment (3E) systems of resource-based regions. Benchmarks, carbon trading, and enhanced carbon trading scenarios were set up around two key indicators, carbon price and total quota, to investigate the effects of combinations of industry and energy policies. The results revealed the following. (1) For the economic system, the carbon markets can have a negative impact on resource-based regions, and its shocks increase with rising carbon prices; however, in the long term, this impact can be repaired. For energy and environmental systems, the carbon market will benefit from reaching the goal of carbon peaking in advance by promoting energy saving and carbon reduction. (2) The impact of carbon quota constraints on the economic system tends to be negative, and their contributions to energy conservation and carbon reduction are relatively small. (3) The policy combination of the carbon market and industrial structure adjustment shows considerable benefits in all three systems; however, the impact of the policy combination of the carbon market and internal structure adjustment of high-carbon energy is weak in the long term. Based on these conclusions, we propose some suggestions at the national level. The government should increase the transfer payment to resource-based regions according to carbon market income, accelerate the cultivation of strategic emerging industries such as green manufacturing, and actively implement clean energy substitution strategies in resource-based regions. This study also provides policy recommendations for Shanxi Province that help formulate sustainable and coordinated development paths for resource-based areas with high carbon emissions and energy consumption.