Impacts of the pilot policy for carbon emissions trading on pollution reduction in China

Global environmental problems are worsening. Among various regulatory measures, market-oriented approaches are most favored by governments worldwide. Using provincial panel data from 2004 to 2020, a multi-period DID model was hereby constructed to empirically study the pollution reduction effects of the pilot policy for carbon emissions trading in China. Findings of this paper could be listed as follows: (1) The pilot policy has achieved notable reductions in waste gas and solid waste, although its effect on wastewater pollutants has been less pronounced; (2) Pollution reduction in the pilot regions can be achieved by optimizing the energy consumption structure; (3) Significant variations in pollution reduction effects are observed between the Northern and Southern pilot regions, with notably stronger policy effects in the north across various pollutants compared to the south. Overall, this paper offers pertinent policy recommendations to aid the Chinese government in enhancing its carbon market.