Does the carbon emission trading system facilitate public building carbon dioxide emission reduction in China?

Abstract

As a quantitative environmental regulation method, carbon emission trading system (CETS) aims to reduce carbon emission at a low cost. However, whether the pilot policy effectively reduces the carbon dioxide (CO₂) emission in the public building sector in China remains uncertain. This study examines the impact of pilot CETS on CO₂ emissions reduction of public buildings by employing a difference-in-differences (DID) model using provincial data from 2008 to 2020. And it also identifies the mechanisms behind CETS's influence through a mediating effect model. The key findings include: (1) the pilot CETS reduces CO₂ emission intensity of the public buildings; (2) green technology innovation is the primary channel through which CETS promotes CO₂ emission reduction of public buildings; (3) heterogeneity analysis presents that the emission reduction effects vary geographically, with a more pronounced effect in northern pilot regions; additionally, the emission reduction effects also alter depending on energy types, with electricity-related emissions reduction proving more suitable for the CETS than fossil fuel emission. This paper provides empirical evidence of the effectiveness of pilot CETS policy in reducing CO₂ emission in the public building sector.