Spatial spillover effect of carbon emission trading on carbon emission reduction: Empirical data from pilot regions in China

Abstract

To estimate the comprehensive impact of China's carbon trading policy launched in 2013 on carbon emissions, this paper conducts a quasi-natural experiment with the combination of difference-in-differences method (DID) and spatial DURBIN model (SDM), further analyzes the mechanism from the perspective of energy use, energy structure and energy efficiency. The empirical results show that, (1) The CET has reduced the carbon emissions in pilots since 2013 significantly. Carbon emissions in neighbouring regions of pilots are also reduced, which proves the existence of spatial spillover effects from CET. Compared with the direct part, the spatial spillover effect accounts for smaller proportion. Both the results of robustness and endogenous analysis support above conclusion. (2) The effect of CET on carbon emissions continues to increase over the long term, while the spatial spillover effect gradually decreases as distance increases. (3) The CET also contributes to the decline of carbon intensity. (4) The decline of fossil energy use is the main path to reduce carbon emissions, while the transformation of energy structure seriously hinders the CET to achieve carbon emission reduction in the long term.