Does the Emissions Trading System Promote Clean Development? A Re-Examination based on Micro-Enterprise Data

Abstract

In 2007, the SO2 emissions trading pilot policy was established to offer a framework for the management of the industrial environment. The evaluation of the effect of this policy on the industrial enterprise environment is expected to be of great importance for the development of the industrial economy. Our paper aimed to analyze the implementation effects and mechanisms of emissions trading systems using data collected from the China Industrial Enterprise Database and China Industrial Enterprise Pollution Discharge Database from 1998 to 2012. It was found that the policy decreased the emissions intensity of industrial enterprises; moreover, the emission reduction effect was most apparent in the eastern region, in non-state-owned enterprises, in large-scale enterprises, and in low-pollution industries. The findings of the intermediate effect test revealed that the emissions trading system positively affects the environment through the “innovation compensation” effect and “resource allocation” effects. Based on these findings, we make the following recommendations for policy: we should continue to comply with the improvement strategy of joining “market decision” with “government regulation”, actively encourage the construction of an emissions trading system, and guide industrial enterprises to fabricate a plan for working on environmental performance under the motivation of technological innovation.