Factors behind CO2 emission reduction in Chinese heavy industries: Do environmental regulations matter?. (October 2020)

• Record Type: Journal Article
• Authors: Ouyang, Xiaoling; Fang, Xingming; Cao, Yan; Sun, Chuanwang
• Is Part Of: Energy policy. Volume 145(2020)
• Publication Date: 2020-10
• Subjects: Environmental regulations -- SYS-GMM -- Propensity score matching -- Difference-in-Difference -- CO2 emissions -- Heavy industries; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2020.111765
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: As the most energy intensive industries, heavy industries are decisive for the realization of energy saving and emission reduction commitments. This study investigates factors behind CO2 emissions mitigation in China's heavy industries based on the system generalized method of moments (SYS-GMM) model. Results indicate that industrial structure (IS), fixed asset investment (F) and historical emissions are drivers for sectoral CO2 emission increase, while energy efficiency (EE) is a key factor for carbon emissions reduction. In order to further explore the effect of environmental regulations, we treat 2011 mandatory emission trading scheme (ETS) in high energy-consuming industries as a quasi-natural experiment, and conduct a Propensity Score Matching and Difference-in-Difference (PSM-DID) approach to analyze the policy effect. We find that the implementation of the mandatory emission reduction policy can reduce CO2 emissions of heavy industries, and the results are robust by testing the randomness of the policies. The policy implications are put forward to optimizing industrial structure and enhancing the environmental regulations in China's heavy industries. Highlights: Factors behind CO2 emissions reduction in heavy industries are investigated. Analyze CO2 emissions in China's heavy industries from the sectoral perspective. The impact of environmental regulations is examined. The mandatory emission reduction policy can reduce CO2 emissions.