Market-based environmental regulations and energy consumption: Evidence from China's carbon emission trading pilot
Year: 2025
Type: article
Abstract: Amid intensifying global climate challenges, market-based environmental instruments such as carbon emissions trading have emerged as pivotal tools for reducing energy consumption and curbing emissions. This study examines the impact of China's carbon trading pilot program using panel data from 274 cities over the period 2013–2022. Employing a difference-in-differences framework, we find that the program significantly reduced energy-related carbon intensity by 3.072 % and decreased coal consumption per unit of GDP by 11.8 million tons. The policy operates through three primary channels: government environmental subsidies, industrial upgrading, and increased urban R&D investment. Moreover, substantial heterogeneity in treatment effects is observed across cities. These findings offer empirical support for the theoretical foundations of market-based environmental regulation and provide differentiated policy guidance for the design of carbon markets in China and other developing economies. • The study examines the impact of the carbon emissions trading pilot policy on energy consumption. • Policy effectively optimizes energy structure and boosts efficiency in pilot cities. • Subsidies, industrial upgrades, and research investment drive energy consumption changes. • Targeted regional carbon trading countermeasures are proposed.
Source: Energy Strategy Reviews
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $4,180
OpenAlex ID: W4413144135