Synergistic effects of a carbon emissions trading scheme on carbon emissions and air pollution: The case of China

Facing the dual pressures of the exacerbation of global climate change and the deterioration of the domestic environment caused by pollution, China has clearly adopted environmental regulatory measures to improve the climate environment. One measure is the carbon emissions trading scheme (CETS), which serves as a notable example of the country's efforts to improve the climate environment. We gathered panel data from 285 prefecture-level cities in China from 2005 to 2018 and used the Difference-in-Differences (DID) model to empirically examine the synergistic effects of the CETS on carbon emissions and air pollution. The results indicate that CETS have been effective in reducing urban carbon emissions by approximately 9.8%. Additionally, the schemes have caused a simultaneous reduction in particulate matter (PM)2.5 emissions by 11.7% and sulfur dioxide (SO2) emissions by approximately 9.7%, mitigating urban air pollution in China. It demonstrates that the scheme has significant synergistic effects on carbon emissions and air pollution. To achieve synergistic effects of CETS, effective measures include reducing energy intensity and upgrading the industrial structure. The implementation of CETS had heterogeneity in different conditions, and the synergistic effect of the scheme is more significant in eastern regions, large cities, and the final industrial stage. Our findings offer innovative solutions for the integrated management of carbon emissions and air pollution and provide valuable insights for policymakers to enhance China's CETS. Integr Environ Assess Manag 2023;00:1-13. (c) 2023 SETAC The carbon emissions trading scheme (CETS) led not only to the significant reduction by approximately 9.8% in carbon dioxide (CO2) emissions, but also effectively mitigated sulfur dioxide emissions by approximately 9.7% and particulate matter (PM)2.5 emissions by approximately 11.7%.This policy highlights the synergistic impact of reducing carbon emissions and air pollution.The effective emission reduction measures of CETS are focused on reducing energy intensity and upgrading industrial structure; the proper implementation of these measures can achieve significant synergistic emission reduction.Based on the heterogeneous analysis of the pilot scheme, the synergistic effects of the CETS are particularly significant in the eastern regions, large cities, and the final industrial stages.