Does the China Emission Trading Schem (CETS) Affect Carbon Abatement and Atmospheric Pollutant Reduction?

Abstract

China Emissions Trading Scheme (CETS) is a market-based approach that promotes emission reduction activities by allocating carbon emission permits and allowing firms to exchange these emission rights in the market. Once CETS play a positive role, it will bring huge carbon abatement and atmospheric pollutant reduction effects. Therefore, this research adopted the time-varying Difference-in-Differences method to construct panel data with 30 provinces in China from 2008 to 2018 as samples to study the role of CETS in carbon abatement and atmospheric pollutant reduction. Four main conclusions emerged from this study. Firstly, the CETS pilot has a significant impact on carbon abatement and the reduction of PM10, SO2 and NO2 concentrations. Secondly, the CETS pilot has a long-term impact on carbon abatement and a relatively short-term effect on the reduction of PM10, SO2 and NO2 concentrations. Thirdly, the CETS pilot has no significant effect on reducing carbon emission intensity. Fourthly, through the regional heterogeneity test, this research found that the intervention of CETS is more significant in carbon abatement and atmospheric pollutant reduction in the northern region than in the southern region of China. The results of this research will help to provide scientific reference for the improvement of government policies.