Impact of carbon emission trading on urban green innovation: empirical evidence from China’s carbon emission trading pilot policy

Abstract

In the face of global climate change challenges, China’s implementation of the carbon emission trading (CET) pilot policy has provided new empirical research opportunities. Based on a dataset covering 281 Chinese cities from 2005 to 2021, this paper employs econometric models to conduct an in-depth analysis of the policy’s impact on urban green innovation (UGI). The findings indicate that the CET pilot policy has significantly promoted green innovation activities in affected cities, with positive effects observed both directly in pilot cities and indirectly in non-pilot cities through spatial spillover effects. In addition, the policy has been found to encourage technological investment and enhance public environmental awareness (PEA), further advancing green innovation. The paper also unveils comprehensive policy effects, indicating that the Big Data Comprehensive Test Zone policy and the New Energy Demonstration City policy work synergistically with the CET pilot policy in advancing green innovation. These findings provide valuable experiences and insights for designing environmental policy tools at the national level, promoting green development, and constructing climate change response strategies.