A market instrument to achieve carbon neutrality: Is China's energy-consumption permit trading scheme effective?. (1st October 2021)

• Record Type: Journal Article
• Authors: Zhang, Yanfang; Guo, Siyuan; Shi, Xunpeng; Qian, Xiangyan; Nie, Rui
• Is Part Of: Applied energy. Volume 299(2021)
• Publication Date: 2021-10-01
• Subjects: Energy-consumption permit -- Trading scheme -- Energy consumption -- Energy intensity -- PSM-DID model; Q4 -- L5; ATT average treatment effect on the treated -- CGE computable general equilibrium -- CNY China yuan -- DEA data envelopment analysis -- DID difference-in-differences -- DDD triple differences -- ECP energy-consumption permit -- ECPTS energy-consumption permit trading scheme -- ETS emissions trading scheme -- NDCs nationally determined contributions -- NDRC the National Development and Reform Commission -- PSM propensity score matching -- tce tons of standard coal equivalent -- Mtce million tons of standard coal equivalent; Power (Mechanics) -- Periodicals; Energy conservation -- Periodicals; Energy conversion -- Periodicals; 621.042
• DOI: 10.1016/j.apenergy.2021.117338
• Languages: English
• ISSNs: 0306-2619

Abstract

Highlights: An energy-consumption permit trading scheme (ECPTS) was implemented in China in 2016. This policy's contribution to reducing energy intensity is proved by a PSM-DID model. The pilot ECPTS generated an average energy saving of about 43 Mtce in 2016–2019. Different mediating effects of industrial structure and energy structure are proved. A national ECPTS is suggested to promote linkage with the emissions trading scheme. Abstract: The Chinese government implemented the energy-consumption permit trading scheme (ECPTS) pilot program in 2016, in order to achieve energy saving and carbon reduction. Based on the PSM-DID model, we attempt to test the effects of the ECPTS on energy consumption and energy intensity. With a counterfactual simulation, this paper also evaluates the potential gains and different mechanisms of this policy. The results show that, under the constraints of the established resources and policy efficiency, there is a positive relationship between the ECPTS and low-carbon economic transformation; the implementation of the above policy in the pilot provinces brought about an average energy saving of 43 Mtce during the period of 2016–2019. However, the potential gains of this policy need to be further increased to meet China's energy control targets. Additionally, a complete mediating effect of the energy structure indicates that the impact of the ECPTS on energy consumption and energy intensity depends significantly on energy structure adjustments. Finally, this paper highlights the key policy implications associated with the empirical results.