Market-oriented energy governance instruments are increasingly adopted globally as a critical carbon mitigation strategy. However, their potential to trigger rebound effects remains contentious. This paper establishes a city-level carbon rebound index (CRI) and leverages China’s energy consumption permit trading policy (ECPTP) as a natural experiment to identify its causal effect on rebound magnitude. Our findings reveal: (1) The ECPTP significantly elevates urban carbon rebound levels by 21.19%, underscoring inherent tensions between efficiency mandates and emission mitigation. (2) This rebound effect is amplified in southern cities, resource-abundant regions, and metropolises. (3) Compliance pressures stemming from ECPTP’s short-term evaluation framework suppress green innovation persistence and reinforce carbon-intensive sectoral lock-in, thereby jointly exacerbating carbon rebounds. China’s experience, as discussed in this paper, offers valuable and transferable lessons for other emerging economies designing energy quota markets under carbon constraints.
Liang et al. (Mon,) studied this question.
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