Curse to blessing: The carbon emissions trading system and resource-based cities' carbon mitigation

• Published in: Energy policy 2023-12, Vol.183, p.113796, Article 113796
• Main Authors: Wu, Jianxian, Nie, Xin, Wang, Han
• Format: Article
• Language: English
• Subjects: carbon; Carbon curse; Carbon emission trading system; carbon markets; energy; energy policy; Environmental Kuznets curve; Quasi-experiment; Resource curse; Resource-based cities
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2023.113796

Does market-incentivized energy policy encourage low-carbon growth in resource-based cities (RBCs)? How to turn the resource curse and the carbon curse into blessings depends on the answer to this question. Using panel data from 122 Chinese RBCs, we assess the policy effect of the carbon emissions trading system (CETS) through staggered difference-in-differences. The CETS effectively reduces carbon emissions in RBCs, and the policy effect is more pronounced in the short term. Mechanism analysis demonstrates that the CETS optimizes industrial and energy consumption structures, promotes technological progress, and enhances government and public environmental concerns. The heterogeneity analysis reveals that the CETS is more effective at reducing carbon emissions in mature RBCs than in declining RBCs, which stems from the fact that public concern is ineffective in the latter. The nonlinear relationship finds the existence of inverted U- and M-shaped evolutionary characteristics of the low-carbon transition in RBCs. Our findings highlight the carbon market’s vital role in RBCs' low-carbon transformation. •We estimate the policy effect of the carbon market in Chinese resource-based cities.•The carbon market tackles the carbon (resource) curse of resource-based cities.•The carbon market reducing carbon emissions in resource-based cities.•We analyze the mechanism and heterogeneity of policy effect.•U- or even M-shaped environmental Kuznets curve exists in resource-based cities.