Research on the Influence Mechanism of Market-Incentivized Environmental Regulation on Carbon Emission Reduction - Analysis based on Carbon Emission Trading Pilot Cities

The realization of the "dual-carbon" goal is an important stage in promoting the green and low-carbon transformation of China's economy, and whether the market-incentivized environmental regulation represented by carbon emissions trading can promote energy conservation and emission reduction of the whole society, and thus realize the sustainable development of the economy and the environment, plays a crucial role. The article takes China's carbon emissions trading pilot project, which was officially launched in 2013, as a quasi-natural experiment, and empirically examines the mechanism of the impact of China's carbon emissions trading pilot project on carbon emissions reduction effects by using panel data from 30 provinces across the country from 2004 to 2021, applying double-difference modeling and propensity score matching, among other methods. The study finds that: (1) carbon emissions trading can effectively reduce carbon emissions; (2) the mediation effect shows that the policy effect is played out thanks to the green innovation effect and the energy consumption structure adjustment effect; (3) the heterogeneity analysis shows that carbon emissions trading has a more significant effect on carbon emissions reduction in the economically developed regions as well as in regions with a lower proportion of secondary industries.