Carbon Emission Trading Scheme, Carbon Emissions Reduction and Spatial Spillover Effects: Quasi-Experimental Evidence From China

The carbon emission trading scheme (ETS) is an essential policy tool for accomplishing Chinese carbon targets. Based on the Chinese provincial panel data from 2003 to 2019, an empirical study is conducted to measure the effects of carbon emission reduction and spatial spillover effect by adopting the difference-in-differences (DID) model and spatial difference-in-differences (SDID) model. The research findings show that: 1) The ETS effectively reduced the total carbon emissions as well as emissions from coal consumption;2) such effects come mainly from the reduction of coal consumption and the optimization of energy structure, rather than from technological innovation and optimization of industrial structure in the pilot regions; and 3) the ETS pilot regions have a positive spatial spillove reffect on non-pilot regions, indicating the acceleration effect for carbon emission reduction.Geographic proximity makes the spillover effect decrease due to carbon leakage