Can Energy-Consuming Rights Trading Policies Help to Curb Air Pollution? Evidence from China

Abstract

Energy-consuming rights trading policies (ECRTPs) represent a significant institutional innovation for China aimed at achieving the dual control targets of total energy consumption and energy consumption intensity. However, the effectiveness of these policies in curbing air pollution remains uncertain. This study treats ECRTPs as a quasi-natural experiment to empirically analyze their impact on air pollution, utilizing panel data encompassing 277 prefecture-level cities in China covering the period from 2011 to 2021. Analytical methods applied include a Difference-in-Differences model, a mediation effects model, and a triple differences model to explore the effects of ECRTPs on air pollution. The findings reveal that ECRTP can significantly suppress air pollution, and this conclusion remains valid even after conducting robustness tests. Mechanism analysis indicates that ECRTPs suppress air pollution by boosting energy efficiency, advancing industrial structure upgrading, and facilitating technological innovation. Further heterogeneous studies show that ECRTPs have a more pronounced inhibitory effect on air pollution in cities that are economically and socially developed, exhibit greater energy-saving potential, are characterized as resource-based cities, and serve as key regions for the prevention and control of air pollution. The research conclusion provides empirical evidence and policy implications for evaluating the environmental effects of ECRTPs and further improving China’s energy-consuming rights trading system, as well as offering references and guidance for other developing countries to put forward ECRTPs.