How to effectively identify the spatial effect of the emissions trading system(ETS) on urban green total factor productivity(GTFP) generated through the linkage of economic factors between cities is a necessary part of scientifically evaluating the effect of ETS policy in emerging- market countries. This study aims to examine the spatial effect, mechanism, and heterogeneity of the ETS on urban GTFP based on the panel data of 281 cities from 2004 to 2017 in China, applying spatial difference-in-differences(DID) Durbin model (SDID-SDM) with multidimensional fixed effect (FE). The results show that ETS significantly improves the GTFP of the pilot cities, produces a spatial spillover effect and the results are robust to the placebo test, propensity score matching SDID (PSM-SDID) test, and Carbon-ETS interference test. Further analysis shows that the policy effect is mainly driven by improving energy efficiency, promoting green innovation, and optimizing the industrial structure. In addition, we found that ETS performs better in regions with a high degree of marketization, strong environmental law enforcement, and a low proportion of coal consumption. In general, the identification method of this study can be used as a scientific reference for conducting similar research in other emerging countries.

The carbon emission trading system (CETS) is an important market-oriented policy tool for the Chinese government to solve the problem of high emissions and achieve the growth of green total factor productivity (GTFP). This study makes up for the neglect of the spatial effect of CETS policy in previous studies and adopts the spatial difference-in-differences (DID) Durbin model (SDID-SDM) method of two-way fixed effects to scientifically identify the direct and spatial effects influencing the mechanisms and heterogeneity of CETS on urban GTFP based on the panel data of 281 cities in China from 2004 to 2017. It found that China’s CETS significantly improved the GTFP of pilot cities but produced a negative spatial siphon effect that restricted the growth of GTFP in surrounding cities. Benchmark results are robust under the placebo test, the propensity score matching SDID (PSM-SDID) test, and the difference-in difference-in-differences (DDD) test. The mechanism analysis shows that the CETS effect is mainly realized by improving energy efficiency, promoting low-carbon innovation, adjusting the industrial structure, and enhancing financial agglomeration. In addition, we find that policy effects are better in cities with high marketization, strong monitoring reporting and verification (MRV) capabilities, high coal endowment, and high financial endowment. Overall, China’s CETS policy achieves the goal of enhancing GTFP but needs to pay attention to the spatial siphon effect. In addition, our estimation strategy can serve as a scientific reference for similar studies in other developing countries.

Whether the new energy vehicle pilot policy (NEVPP) can achieve green innovation and emission reduction is an important exploration for China to achieve green and sustainable development. This research aims to empirically investigate the impact, impact mechanism, and heterogeneity characteristics of the NEVPP on urban green innovation and emission reduction based on panel data from 281 cities in China from 2004 to 2017, using difference-in-differences (DID) methods and fixed effect (FE) models. The results show that the NEVPP significantly reduces the carbon dioxide emissions of the pilot cities but significantly inhibits the green innovation, and the results are robust to the placebo test, propensity score matching DID (PSM-DID) test, instrumental variable (IV) estimation, emissions trading system (ETS), and Carbon-ETS interference test, and change of the dependent variable. In addition, further studies have shown that the NEVPP’s emission reduction effects are mainly achieved by reducing energy consumption, promoting technological innovation, and adjusting industrial structure. Moreover, we found that the NEVPP performed better in the regions where the level of economic development is high, the local government has a good relationship with the market, and the level of non-state economic development is high. In general, our research results show that the NEVPP has achieved innovation and emission reduction policy effects in China, but it is also accompanied by an inhibitory effect on green technological innovation.