What makes the synergy between pollution and carbon emission control effective? Based on an evaluation of the carbon emissions trading pilot policy

Abstract To accomplish clean air and carbon peaking and neutrality goals in the new development stage, it is essential to synergize air contamination and carbon emission reduction. This research assesses the synergistic effect between air contamination and carbon emission reduction of the carbon emissions trading (CET) pilot policy in China using the difference-in-differences (DID) model. The results demonstrate that, first, this policy has a dual impact by considerably reducing both carbon emissions and PM 2. 5 emissions. Second, the pilot policy can decrease carbon emissions through ‘pollution-to-carbon’ synergistic control effect, which enables the incentive and restraint functions to be strengthened for trading carbon emissions. Nevertheless, the synergistic control effect of ‘carbon-to-pollution’ is not significant since the replacement effect produced by investment pressure. Third, the synergy between air contamination and carbon emission management in pilot areas substantially reduces pollution emissions, suggesting that a greater degree of synergistic control generates more effective incentive or restraint effect.