The impacts of carbon trading policy on China's low-carbon economy based on county-level perspectives

Abstract

Under the background of “carbon peak” and “carbon neutrality”, the important role of Carbon Trading Policy (CTP) played in China's micro-level low-carbon economy cannot be ignored. However, discussions on the CTP's impacts on China's county-level low-carbon economic quality are insufficient due to limited data availability. Hence, this paper estimated the quality of China's county-level quality of low-carbon economy based on satellite data during 2006–2018. In particular, the quality of low-carbon economy was evaluated by the ratio of low-carbon GDP to real GDP, which considers forest carbon sinks, CO2 emissions and real gross domestic product revised by the nighttime light data. Subsequently, this study examined how CTP affected China's county-level low-carbon economy using difference-in-difference-in difference (DDD) method. The results show that (1) CTP significantly improved the quality of low-carbon economy in county-level regions with high proportion of high-emissions energy consumption or secondary industry's output; (2) mechanism analysis shows that administrative intervention currently promoted the quality of low-carbon economy, while the market mechanism had lagged and positive effects; and (3) the ratio of forest land cover to total land cover and technological progress were also significant channels for CTP to improve the quality of low-carbon economy.