Why did the Chinese government introduce the carbon emissions trading scheme, and to what extent has it been effective in controlling carbon emissions in China?

By constructing the panel data of 30 provinces in China, this research studies the reasons for the introduction of a carbon emission trading system in China and to what extent this system affects the reduction of carbon emissions. The government has taken measures to control carbon emissions in line with the global climate goals China joined the world in the Paris Agreement and the national goal of achieving carbon neutrality by 2026. However, the ineffectiveness of the carbon tax policy could not achieve the government’s goals, so the carbon emission trading system was established. This research uses the DID model to evaluate the effectiveness of the carbon emission trading system. Through the benchmark regression results, it can be concluded that the carbon emission trading policy can promote the reduction of carbon emissions in Chinese provinces. Through the heterogeneity test, it can also be concluded that this policy has a greater impact on the eastern provinces of China, while it has almost no impact on the central region. This research provides policy implications for China facing carbon emission reduction.