Carbon Abatement and Leakage in China’s Regional Carbon Emission Trading

Emission trading schemes (ETS) are increasingly becoming a popular policy instrument to balance carbon abatement and economic growth. As a globally unified carbon pricing system has not yet been established, whether regionally operated ETSs cause carbon leakage remains a major concern. Taking China's regional pilot ETSs as a quasi-natural experiment, the study uses the spatial difference-in-differences method to examine how regional ETSs affect carbon emissions in and outside cities of policy implementation. Our analysis finds that China's regional ETS policy contributes to a 6.1% reduction in urban CO