Research on the Impact of Carbon Emission Trading Policy on Carbon Emissions: An Empirical Examination Based on 284 Prefecture-level Cities in China

This study leverages the implementation of China's pilot Emissions Trading Scheme (ETS) policies as a quasi-natural experiment. Utilizing panel data from 284 prefecture-level and above cities in China spanning 2003 to 2017, we employ a multi-period difference-in-differences (DID) approach to empirically investigate the carbon reduction effects, mechanisms, and heterogeneity associated with the ETS pilots. The findings reveal that: (1) The ETS effectively reduces both the total carbon emissions and carbon intensity in the pilot regions through dual channels of aggregate control and efficiency improvement. This conclusion remains robust after a series of rigorous tests. (2) The ETS achieves carbon reduction in pilot cities through the combined action of market mechanisms and administrative interventions. While the role of market mechanisms is relatively limited, administrative interventions contribute significantly. (3) The carbon reduction effects of the ETS exhibit significant heterogeneity. From the perspective of urban resource endowment, non-resource-based cities outperform resource-based cities in carbon reduction effectiveness. Regarding allowance allocation methods, regions employing a hybrid approach combining free allocation with auction and fixed-price sales demonstrate superior carbon reduction outcomes compared to those using solely free allocation or a combination of free allocation and auction. In terms of carbon price, the ETS policy in high-carbon-price regions is more effective in reducing total carbon emission, but less effective in lowering carbon intensity. This study provides empirical evidence and policy insights for China to tailor the implementation of its ETS to local conditions, thereby advancing the achievement of its "dual carbon" goals and fostering green transition. JEL Classification：Q53·C23·L51·R11