Harvard Researchers on Carbon Market Pilots Effectiveness in Reducing Emissions in the Electricity Sector

August 5, 2021

Full article in Carbon Brief

When carbon emission trading meets a regulated industry: Evidence from the electricity sector of China
Journal of Public Economics

A new paper has assessed the effectiveness of China’s carbon market pilots in reducing emissions in the electricity sector by analysing data on thousands of power plants from across the country between 2005 and 2017. The study shows that the carbon emission trading system (ETS) has “no effect” on changing the coal efficiency of regulated coal-fired power plants. However, the researchers identified a “significant” reduction in coal consumption associated with ETS participation. This reduction was achieved by lower electricity production ordered by dispatch authorities and not because of the carbon price, according to the paper. Dr Mun S. Ho from Harvard University, a co-author of the paper, tells Carbon Brief: “The conclusion about the impact of regulated electricity prices on the effectiveness of carbon prices is important to designing adaptations of the national ETS to make it work efficiently.” (Read Carbon Brief’s in-depth Q&A to learn more about China’s national ETS.)