Is the Emission Reduction Incentive of the National Carbon Emission Trading Market Effective? —An Analysis Based on Transaction Data
DOI:
https://doi.org/10.71222/kwvsy832Keywords:
carbon market, emission reduction, carbon allowances, transaction data, market effectivenessAbstract
The national carbon emission trading market has been operating for more than four years since its official launch in July 2021, serving as a core policy instrument for China to advance its ambitious carbon peaking and carbon neutrality goals. As the world's largest carbon market by covered emissions, its operational efficiency and policy impact are of significant academic and practical interest. Using comprehensive market transaction data spanning from July 2021 to December 2024, this paper conducts an in-depth assessment of the emission reduction incentive effects of the national carbon market. The evaluation is structured across four critical dimensions: price signaling mechanisms, compliance requirements, overall cost savings, and market liquidity. The empirical results indicate that the national carbon market has achieved remarkable effectiveness in enforcing compliance requirements and generating substantial cost savings for participating entities. Notably, carbon prices have exhibited a sustained upward trend, successfully surpassing the 100-yuan-per-ton threshold, which strengthens the financial incentive for emission reductions. Furthermore, the compliance rate has been consistently maintained above 99.5%, and cumulative emission reduction costs have been significantly reduced by an estimated 40.5 to 48.1 billion yuan. Nevertheless, the analysis reveals that critical deficiencies persist in overall market liquidity and long-term carbon price stability. Addressing these challenges requires further institutional refinement, including the introduction of diverse trading products and the optimization of allowance allocation methods, to ensure the sustainable development of the carbon trading mechanism.References
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