Impact of sulfur dioxide emissions trading pilot scheme on pollution emissions intensity: A study based on the synthetic control method

Abstract

Emissions trading is presumed to be one of the several effective means to solve the externality of environmental pollution in enterprises. However, previous studies hold varying opinions on the effectiveness of China's sulfur dioxide emissions trading pilot scheme (SETPS). Based on the panel data from 30 provinces in China from 2000 to 2015, the present study uses the synthetic control method to evaluate the impact of the SETPS on the intensity of industrial sulfur dioxide (SO2) emissions in the pilot areas. This can avoid problems in the terms of selection bias and policy endogeneity. We find that the effect of the SETPS has regional heterogeneity; Tianjin's emissions trading scheme has achieved the desired reduction effect, whereas the implementation of the SETPS in other areas did not reduce the intensity of industrial SO2 emissions. The robustness test results support the aforementioned conclusions. This study proposes that policy support is necessary for reducing the regional SO2 emissions and that these policies should be constantly adjusted during their implementation. Tianjin's sulfur dioxide pilot needs to be studied in detail and promoted in other regions.