When Carbon Emission Trading Meets a Regulated Industry: Evidence from the Electricity Sector of China
Researchers examine the effectiveness of China’s carbon market pilots in reducing emissions in the electricity sector.
This paper provides retrospective firm-level evidence on the effectiveness of China’s carbon market pilots in reducing emissions in the electricity sector. We show that the carbon emission trading system (ETS) has no effect on changing coal efficiency of regulated coal-fired power plants. Although we find a significant reduction in coal consumption associated with ETS participation, this reduction was achieved by reducing electricity production. The output contraction in the treated plants is not due to their optimizing behavior but is likely driven by government decisions, because the impacts of emission permits on marginal costs are small relative to the controlled electricity prices and the reduction is associated with financial losses. In addition, we find no evidence of carbon leakage to other provinces, but a significant increase in the production of non-coal-fired power plants in the ETS regions.
Resources Radio — Jan 24, 2023
Measuring Scholarly Diversity in Environmental and Resource Economics, with Neha Khanna and Nick Kuminoff
Neha Khanna and Nick Kuminoff discuss what scholarly diversity looks like in the field of environmental and resource economics.
On the Issues — Jan 20, 2023
On the Issues: Big Decisions in 2023, Benefits of Electric Vehicles, and More
A biweekly newsletter connecting global current events, pressing climate and energy policy news, and economics research from RFF scholars. This week: big decisions in 2023, benefits of electric vehicles, and more.
Common Resources — Jan 20, 2023
What Forces Will Shape Energy and the Environment in 2023?
Experts and leaders of federal agencies shared their insights on the biggest climate, energy, and environmental priorities for the coming year at a recent event hosted by Resources for the Future.