Is single or synergistic environmental permit trading system more effective? A study based on Chinese industry

Abstract

Under the ambitious pledge of carbon peaking and carbon neutrality, China is facing the stringent pressure of energy conservation and emissions abatement. The environmental permit trading such as the carbon emissions trading scheme (CETS) and the energy-use permit trading scheme (EPTS) have been implemented. However, it is unclear that whether the synergistic trading system is more effective compared with the single trading scheme and which trading system is applicable for different entities. We established three non-parametric optimization models for single and synergistic trading scenarios to estimate the potential industrial outputs, energy conservation and carbon emissions reduction of different regions and sectors. The results indicate that the synergistic trading system generates more potential outputs and energy savings, but the CETS can generate greater emissions reduction potential. The central and the eastern regions can respectively choose the synergistic trading system and the single trading system. The high-emission and high energy-use industries have more synergistic environmental potential and thus the synergistic trading system is more appropriate. However, negative environmental potential implies that moderate governance and supervision from the government is necessary. The methodological and analytical novelty of the study can support the proposal targeted policy recommendations, accelerate the construction of synergistic trading system and adopt system suiting local conditions.