Advances in Management and Applied Economics

Research on the Impact of Green Certificate Trading System on Regional Electricity Carbon Emissions

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• Abstract

   

  This paper utilizes the nationwide pilot implementation of China's Green Certificate Trading System in 2017 as a quasi-natural experiment. A generalized difference-in-differences model is constructed, and panel data from 31 provincial-level administrative regions from 2010 to 2023 are used to empirically examine the impact of the system on regional carbon emission intensity in the power sector. The study finds that the implementation of the Green Certificate Trading System significantly increased regional carbon emission intensity in the power sector. This finding remains robust after parallel trend tests, placebo tests, and various robustness checks. Mechanism analysis reveals that the main reasons for this policy effect contradicting the original emission reduction intention are: at the institutional design level, the separation between green certificates and carbon markets and the failure of the pricing mechanism; at the market mechanism level, the non-coverage of indirect emissions and insufficient liquidity; and at the technological pathway level, the existence of technological lock-in effects and energy rebound effects. This study provides new evidence on the potential unintended consequences of implementing environmental regulation policies and offers targeted policy insights for improving the green certificate trading system and collaboratively advancing the low-carbon transition of the power sector.

   

  JEL classification numbers: P28.

  Keywords: Green Certificate Trading System, Regional carbon emission intensity in the power sector, Generalized difference-in-differences.