Research On The Effectiveness Of Carbon Emissions Trading System In China

Accompanied by severe energy supply and demand contradiction and environmental protection pressure,the extensive economic growth model based on factor expansion is no longer fit for China’s current economic development.The intensive economic growth model with continuous improvement of green total factor productivity(GTFP)considering resources and environment will become an inevitable choice for the sustainable development of China’s economy and criteria for the effectiveness of carbon trading systems.The Chinese government is faced with the contradiction between our commitment to international carbon emission reduction and domestically sustainable economic growth.Based on China’s"low-cost" competition model and regional unbalanced development,our environmental economic system arrangement and effectiveness in the field of energy conservation and emission reduction have the following problems:(1)The "low-cost" competitive strategy that is distorted by factor prices runs through the whole economic development from the process of micro-subject decision-making to macroeconomic operation.However,due to the lack of consideration of the characteristics of China’s economic growth,the traditional GTFP cannot observe the change of allocation benefit caused by the change of factor combination under cost balance,which causes the carbon trading system effectiveness evaluation bias error.(2)The implementation of the carbon trading system is an important strategic deployment of the Party Central Committee and the State Council to achieve sustainable economic development.Whether the carbon trading system,as an emission reduction tool motivated by market,will control regional total emission and improve the productivity needs to be verified.(3)Differentiated system design for pilot reflects the consideration of unbalanced characteristics among regions,but so far the pilots have been plagued by inefficient problems.Whether the system design is effective,and do we have any dynamic corrective mechanism.The answers to the above questions will provide strong support for the smooth transition of China’s carbon trading system from partial pilot construction to unified market.In the meantime,they will also offer realistic bases for the further improvement of the dynamic adjustment and correction of carbon trading system design in the actual operation of national carbon market.Therefore,this paper puts forward the effectiveness of carbon trading system from the perspective of green total factor productivity.By adopting the logical chain of "Advance Institutional Arrangement--Participant Behavior Decisions--Effects of Cost-Saving and Technology Incentives--GTFP--Effectiveness improvement oriented system correction",it constructs a theoretical model of the influence of decision-making behaviors on GTFP under the carbon trading system to analyze the implement mechanism of the carbon trading system effectiveness,and then empirically tests effects of its cost-saving and technology incentives,and establishes an evaluation system and dynamic correcting mechanism of carbon trading system.This will be beneficial to analyze the inefficiencies in the process of China’s carbon trading system construction,and seek solutions for the direction,path and policy focus to promote sustainable economic growth.Firstly,based on the institutional determinism of the new institutional economics(System determines production),this thesis introduces the carbon trading system design related variables into the traditional production behavior decision analytical framework in enterprises.By establishing a model of carbon trading participants’ behavior decision,this thesis solves the objective function according to the principle of minimizing the cost of social abatement,and discusses the carbon price,quota allocation and social welfare when the carbon trading system is effective.This thesis focuses on points that will ultimately lead to a total factor productivity(TFP)change,such as the setting of government emission reduction targets,initial quota allocation,how incentive and penalties are applied to the allocation and reduction of production factors in enterprises,the investment of emission reduction technology and the participation of behavior decisions in carbon trading,which provides a theoretical basis for judging whether carbon trading system is effective according to the TFP.According to the study:①The change in GTFP is related to carbon price and the design of carbon trading system.The higher the carbon price,the higher the GTFP of the enterprise.Besides,the design of the carbon trading system will indeed affect the GTFP of the enterprise by influencing whether the enterprise participates in the transaction and whether it makes additional investment in the technology of emission reduction.The greater the incentive intensity and punishment in the system design,the higher the GTFP.②Optimizing the system design will improve the welfare of the whole society,and effectively increase the social utility by affecting the carbon price,which enables the market to possess effective resource allocation.The theoretical analysis framework for the effectiveness of carbon trading system in this thesis is the answer to the scientific questions on how to design the system to achieve the institutional arrangement of economy-drive emission reduction tools and the micro-mechanism of the carbon trading system in improving the GTFP.In the meantime,this framework is also the theoretical foundation of the whole thesis.Secondly,this thesis will build a new GTFP index taking costs into account(CGTFP)that can simultaneously reflect total emissions,abatement costs,and technology advancement,and use productivity changes as a criterion for evaluating the effectiveness of carbon trading system.The previous literature lacks consideration of China’s "low-cost" competition model and drastic changes in industrial structure,resulting in "deviations" in the traditional evaluation of GTFP,and it was impossible to consider both carbon emissions and cost trade-offs.To this end,this thesis incorporates carbon emissions as undesired outputs and puts them in the set of production possibilities,and also introduces a cost function under a given set of production possibilities to construct a new CGTFP index.At the same time,using nuclear density and random kernel estimation methods to test the time series and dynamic distribution of CGTFP for visual analysis,this thesis reveals the regional differences and convergence in GTFP before and after the implementation of the system.According to the research:①As a large developing country,China is in a dual,unbalanced state of resource endowments and economic development between regions.The regional changes in GTFP also show large differences between regions.②China’s CGTFP continues to improve with a jumping structural break-point after the implementation of the carbon trading system that are more significant in the pilot area.The index of CGTFP constructed in this thesis,expands the existing TFP index calculation method,controls and considers the total carbon emissions and production costs with TFP and makes up for the traditional GTFP which is unable to examine the lack of allocation benefits caused by changes in factor combinations under cost trade-offs.Such indexes not only give better explanation to the theoretical model in this thesis,but also help to grasp the Chinese issue more accurately.Thirdly,this thesis explores the path to the effectiveness of the carbon trading system and tests its effectiveness.Based on the logical chain of "Carbon Trading--Cost Saving and Technology Incentives--TFP",this thesis decomposes the index of macro-integrated CGTFP that considers costs into cost allocation efficiency and technology utilization efficiency,which correspond to the two micro-channels of the effectiveness of the carbon trading system in the theoretical model.In addition,the method of random kernel estimation can used to visually analyze the distribution pattern and dynamic evolution characteristics of the technical incentive effect and cost-saving effect in carbon trading system,which reveals the regional differences and convergence.Also,the propensity score method is used to match the pilot area and the non-pilot area,and improve the difference-in-difference model to quantitatively test the cost saving effect and technical incentive effect of the carbon trading system.According to the research:①The improvement of national green total factor productivity comes from the improvement of technology utilization efficiency led by technological progress and the improvement of cost allocation efficiency led by configuration optimization,and the determinants are changing from the traditional technology-oriented to the cost-oriented.②By matching the external environmental factors of the pilot areas and non-pilot areas in the five aspects:economic foundation,resource endowments,government intervention,regional innovation capability,and regional opening degree,the errors of sample selection can be significantly reduced.③The cost-saving effect of the carbon trading system does exist.Under the regional non-equilibrium condition,the technical incentive effect of the carbon trading system on CGTFP still shows the characteristics of crowding out.But the carbon net effect of the technical incentive effect of the trading system will appear after fixing the deviation as long as the propensity score matches.By the decomposition of CGTFP,this thesis provides a new perspective for realizing the effectiveness of carbon trading system,and makes up for the shortcoming of the previous literatures which use the method of empirical summary or general equilibrium model solution to test the effect in advance due to data acquisition and quantitative difficulties.It also makes up for the deficiency that the above method cannot strip off the overlapping use of emission reduction tools,which interferes with the carbon trading and affects the green total factor productivity results.Finally,this thesis constructs the effectiveness evaluation system of China’s carbon trading system to eliminate the influence of the external factors of the system design on the results.Also by analyzing from the perspective of effectiveness improvement,this thesis can figure out how to maximize the improvement from carbon trading system on the CGTFP in terms of the design and improvement of the system.The system provides a practical solution to the dynamic correction of the carbon trading system design for the actual operation of the national carbon market.This study will use the existing seven pilots as the object of analysis.Based on the institutional design characteristics of regional differentiation,this thesis collects,summarizes,screens,and quantifies institutional design elements from the complex carbon trading policy documents as input indicators.Using the technical incentive effect and cost saving effect of carbon trading system on CGTFP as output indicators,establishes an evaluation system for the effectiveness of carbon trading system which is informative and digital.By calculating the difference coefficient ’of each region,the influence of the external environment of the system design on the results is eliminated.The super-efficiency model based on the direction vector is used to evaluate the effectiveness of the carbon trading system in the existing pilot areas.The improvement of the redundancy variable based on the improvement of effectiveness provides experience and policy recommendations for the correction of the carbon trading system design in the existing pilot regions and the construction of a unified national carbon trading system.Traditionally,the default decision-making units of efficiency evaluation model are in the same external environment,while the premise of the establishment of the carbon trading system pilots is the external environment heterogeneity.Therefore,the traditional conclusion is also deviated.This study constructs an evaluation system for the effectiveness of China’s carbon trading system,which excludes the deviation of the external environment of the system design on the results,compensates for the lack of a clear definition of the validity of the carbon trading system,a unified index evaluation system,and the problem of making the data difficult to quantify due to differences in system design caliber in the current research.The politic implications of this thesis are also very clear that:(1)To explore the effectiveness of China’s carbon trading system by considering the design of differentiated systems as the focus of the national carbon market on the issue of "equity and efficiency".(2)To use the CGTFP index,this can simultaneously reflect total emissions,abatement costs,and technological progress as an indicator for the effectiveness of the carbon trading system.To reveal the path to the effectiveness of the carbon trading system,namely the micro-mechanism of the cost-saving and technology-incentive benefits of the carbon trading system.(3)To improve the existing pilot carbon trading system design with the goal of systematic effectiveness promotion,and at the same time to provide a set of evaluation systems for the dynamic adjustment and correction of carbon trading system design for the actual operation of the national carbon market.