Urban carbon emission intensity under emission trading system in a developing economy: evidence from 273 Chinese cities
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RESEARCH ARTICLE
Urban carbon emission intensity under emission trading system in a developing economy: evidence from 273 Chinese cities Kai Tang 1 & Yichun Liu 2 & Di Zhou 3
&
Yuan Qiu 4
Received: 28 May 2020 / Accepted: 9 September 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The international community has generally recognized the key role of developing countries’ cities in reducing carbon emissions, an elemental way to mitigate climate change. However, few have empirically analyzed the impact of market-based instruments such as emission trading system on urban carbon emissions in developing economies. This paper examines the effect of China’s pilot carbon trading markets, the first emission trading system in developing economies, on cities’ carbon intensity. We also explore the mechanism by which the emission trading system achieves its influence. The PSM-DID method is used to analyze the panel data including China’s 273 prefecture-level cities from 2010 to 2016. The results illustrate that the emission trading system significantly decreased pilot cities’ carbon intensity and this effect endured; as time progressed, the reduction effect was increasing. Through mediating effect analysis, we find that the emission trading system reduced the carbon intensity via increasing the proportion of tertiary industry output value in GDP and decreasing the energy intensity. Overall, the empirical results suggest that the Chinese government should drive the establishment and improvement of a national carbon market, proactively adjust industry structure, and consider the possible influence caused by the potential energy rebound effect. Keywords Emission trading system . Urban carbon intensity . PSM-DID . Mediating effect . China . Pilot carbon trading markets
Introduction The rapid urbanization in many developing countries has boosted the emissions of greenhouse gasses (GHG) in cities in recent years (Gouldson et al. 2016; Ali et al. 2019; Tang et al. 2020c). Urban communities in developing countries are responsible for the major of national energy use and GHG emissions, mainly CO2 (IPCC 2014). For example, in China, Responsible Editor: Nicholas Apergis * Di Zhou [email protected] 1
School of Economics and Trade, Guangdong University of Foreign Studies, Guangzhou 510006, China
2
Department of Accounting and Finance, Lancaster University, Lancaster LA1 4YW, UK
3
School of Mathematics and Statistics, Guangdong University of Foreign Studies, Guangzhou 510006, China
4
School of Business, Guangdong University of Foreign Studies, Guangzhou 510006, China
the globally largest developing country and CO2 emitter, cities consume more than 60% of national energy and emit more than 70% of national CO2 (Su et al. 2018). Since the future global urbanization will mostly take place in developing countries in the coming decades1, CO2 emissions in those cities are expected to further increase. Accordingly, the international community has generally recognized the key role of developing countries’ ci
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