Clean energy, emission trading policy, and CO₂ emissions: Evidence from China

Abstract

This paper constructs a unique dataset of clean energy and adopts static panel models and dynamic panel specifications to explore the correlation between clean energy and CO 2 emissions. Furthermore, this paper employs the interaction term of pilot areas and pilot time as the proxy of emission trading policy to examine the effect of China’s emission trading pilot on clean energy. Then, this paper conducts quasi-natural experiments on CO 2 emissions. Our findings show a negative correlation between CO 2 emissions and clean energy. We also find that China’s emission trading pilot has a significant impact on promoting clean energy. In addition, empirical results affirm that emission trading market pilots can help decrease CO 2 emissions. Finally, we put forwards relevant policy recommendations.