The Synergistic Effect of the Carbon Emission Trading Scheme on Pollution and Carbon Reduction in China’s Power Industry

The synergistic effect of pollution and carbon reduction can alleviate the dual pressure of improving environmental quality and reducing greenhouse gas emissions in China. The carbon emission trading scheme (CETS) is a crucial market-based tool for carbon emission reduction, and understanding its synergistic impact on air pollution control is essential. Based on data from 30 provincial panels in China spanning from 2007 to 2021, we employ the difference-in-differences (DID) method to analyze the synergistic effects of the carbon emission trading plan in the power industry and its influence mechanisms are examined. We observe that the CETS significantly enhances both pollution and carbon reduction in China’s power sector, particularly demonstrating effective synergy in reducing CO2, SO2, and PM2.5 emissions. Furthermore, mechanism analysis reveals that the CETS achieves joint emission reductions by lowering energy consumption, influencing the power industry’s generation structure, promoting technological innovation among enterprises, and thereby realizing synergistic pollution and carbon reduction effects in China’s power sector. Heterogeneity analysis shows that regions with limited power facility, low electricity generation, and small economic scale exhibit the most pronounced synergistic benefits from pollution and carbon reduction efforts.