DOES CHINA’S CARBON EMISSION TRADING SCHEME REDUCE EMISSIONS? ANALYZING THE IMPACT OF THE ETS PILOTS
As the world cooperates to combat climate change, China, as the biggest greenhouse gas emitter, announced that it would launch a national carbon emission trading scheme (ETS) in 2017. Before this national ETS, China had already had seven pilots operated since 2013. These seven pilots are: Beijing, Tianjin, Shanghai, Chongqing, Guangdong, Hubei, Shenzhen, and they are running different ETS system according to their regional specific characteristics. Though the pilots have run for three years, there is limited quantitative research on their environment abatement effect. Most of the existing studies are qualitative and focusing on policy recommendations. This study tries to fill this gap and explore the ETSs impact on CO2 emission reductions quantitatively. I compare ETS pilots with non-ETS provinces, using a fixed effect model and synthetic control methods, to understand the effect of the pilot program on CO2 emissions. My regression results do not show a statistically significant negative relationship between being as ETS and the CO2 emissions. The synthetic control method suggests a negative relationship and a policy effect, after 2011 when the ETS was first announced.
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