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In this study, we consider the sulfur dioxide emissions trading pilot scheme (SETPS) of China, with pilot provinces as the treatment group and other provinces as the control group. We employ the difference-in-differences method to estimate the effects of the SETPS on pollution mitigation and economic growth. Results show that the SETPS plays a robust role both in China’s industrial sulfur dioxide abatement and in economic growth. Furthermore, by applying regression analysis to explore regional heterogeneity, we find that it has a stronger effect on industrial sulfur dioxide reduction in the Central China than it does in the Eastern and Western China, and it also exerts a positive influence on economic growth in the Western China. Moreover, a time-trend analysis indicates that the pollution reduction effect of the SETPS has decreased, while the economic growth effect has slightly increased since 2007.

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The low‐carbon pilot city project is a critical policy experimentation in China, which is designed to implement policy instruments and local initiatives for low‐carbon development targets. However, some scholars have argued that local pilots have not met the central government's expectation of policy innovation. The current literature mainly focuses on pathways at the national level and few studies have discussed how subnational authorities respond to the national goals. Through a case study, we present the actions and the political will of the local authorities and discuss the logic involved in the local government's response to the low‐carbon pilot city project. We conclude that the bottom‐up initiative has become a top‐down policy implementation process, which contributes little to the design of new and appropriate policy instruments and initiatives. The local government only “package up” the low‐carbon related policies responding to the country's requirement, showing less enthusiasm and political will toward low‐carbon development initiatives. This study contributes to subnational pathways of low‐carbon development and explores the responses and the political will of local government to policy experimentation.