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The effectiveness of China's regional carbon market pilots in reducing firm emissions

The emission trading system (ETS) is an important policy instrument for China to achieve its climate targets. However, the effectiveness of ETS in emission reductions and its economic consequences are unknown. Using a unique dataset of firm tax records, we comprehensively assess the impacts of China’s regional ETS pilots, taking advantage of the policy experiments in certain sectors across seven jurisdictions. We demonstrate unambiguous evidence that China’s ETS leads to a reduction in carbon emissions despite low carbon prices and infrequent trading. We also identify the channels through which firms respond to ETS by adjusting energy consumption and sources, employment, capital, and productivity. The lessons learned from the regional pilots shed light on the design of China’s national carbon ETS.

The Chinese National Tax Survey Database (CNTSD) can be made available upon request to the State Administration of Taxation of China or the Ministry of Finance of China. The code ....

United States , Energy Foundation China , Ministry Of Finance China , National Natural Science Foundation Of China , Clean Development Mechanism , Administration Of Taxation China , Chinese National Tax Survey Database , European Union , Kyoto Protocol , State Administration , National Natural Science Foundation , Qinglan Project ,