The Energy Saving and Emission Reduction Effect of Carbon Trading Pilot Policy in China: Evidence from a Quasi-Natural Experiment

Promoting the carbon emission trading system has been a crucial measure for China to fulfill its carbon neutrality commitment. Taking the carbon emission trading system implemented in China in 2013 as a quasi-natural experiment, based on the provincial panel data of China from 2005 to 2019, this paper adopts the difference-in-difference (DID) method and the synthetic control method (SCM) to evaluate the impact of the carbon emission trading system on energy conservation and emission reduction in pilot provinces and cities. The research findings reveal that, on the whole, the carbon emission trading system has significantly promoted the process of energy conservation and emission reduction in pilot provinces and cities. Other robustness tests, including the parallel trend test, PSM–DID stationarity test and placebo test have also been passed. Heterogeneity analysis shows that the most significant policy effects occur in Tianjin and Shanghai, followed by Hubei. The emission reduction effect of Guangdong displays a trend of first decreasing and then increasing. The test results demonstrate that the carbon emission trading system can strengthen the process of energy conservation and emission reduction by optimizing the industrial structure and energy structure. In conclusion, policy makers should coordinate the relationship between the government and the market and speed up the transformation of environmental policy from command control type to market incentive type. Meanwhile, improve the property right system and accelerate the promotion of carbon emission trading pilot policies in China according to local conditions. By encouraging technological innovation, a new market-oriented path of energy conservation and emission reduction guided by the enhancement of energy efficiency and the optimization of energy and industrial structures ought to be formed.