Carbon-Trading Pilot Programs in China and Local Air Quality

Abstract

China emits twice as much CO_2 as the United States. Launched in seven regions in 2013-2014, China's pilot carbon-trading programs cover roughly 7 percent of China's CO_2 emissions. These market-based policies offer the best existing evidence as to whether the national carbon-trading program starting in 2021 will curb emissions. Here, we analyze changes in air quality using visibility measures from weather stations. We find the pilot programs improved local air quality, and this was likely a co-benefit of reduced carbon emissions. However, these improvements were modest, and there is some evidence of pollution leakage to the nonpilot regions.