Is the carbon emission trading scheme conducive to promoting energy transition? Some empirical evidence from China

Abstract

The Carbon Emissions Trading Scheme, an important market-driven environmental regulating tool, which will significantly impact China's achievement of its “30·60 Dual-Carbon Target, can also be seen as promoting and accelerating the energy transition. This study investigates the influence of the Carbon Emissions Trading Scheme on energy transition using the difference-in-differences model and presents evidence for the effectiveness of the Carbon Emissions Trading Scheme in energy transition using the propensity score matching method and other robustness testing methods, using provincial data of China from 2010 to 2016. The results demonstrate that: (1) the Carbon Emissions Trading Scheme has promoted approximately 4.6% of the energy transition; (2) the robustness analysis reveal the beneficial function of the Carbon Emissions Trading Scheme in the energy transition; and (3) the mechanism analysis identifies technological innovation and financial decarbonization as two critical impact pathways. Finally, based on the research results of our study, we provide corresponding policy implications for improving China's Carbon Emissions Trading Scheme and accelerating the energy transition.