Analysis of the Impact of China's Emissions Trading Scheme on Reducing Carbon Emissions

By referring to the methods provided by Inter-governmental Panel on Climate Change(IPCC) and National Development and Reform Committee(NDRC), we first calculate the carbon emissions and carbon intensity (measured by emissions per output) of 39 sectors in 24 provinces from 2005 to 2015. Then using the panel data calculated, we apply difference-in-difference (DID) two-way fixed effects models to evaluate the causal impact of China's Emissions Trading Scheme (ETS) on the reduction of carbon emissions. Empirical results indicate that ETS sectors significantly decreased their emissions relative to non-ETS sectors after the start of ETS, while no obvious impact on carbon intensity was identified after ETS started. The results suggest that there is still room for policy makers to improve the ETS design to achieve declines not only in carbon emissions but also in carbon intensity in national ETS. (C) 2019 The Authors. Published by Elsevier Ltd.