Commodities (Aug 2024)

The Efficiency of China’s Carbon Trading Schemes: A Tale of Seven Pilot Markets

  • Yigang Wei,
  • Yan Li,
  • Julien Chevallier,
  • Michal Wojewodzki

DOI
https://doi.org/10.3390/commodities3030020
Journal volume & issue
Vol. 3, no. 3
pp. 355 – 375

Abstract

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This study evaluates the efficiency of China’s seven emission trading schemes (ETS) piloted in 2013. We evaluate seven pilots’ overall technical and scale efficiencies and temporal dynamics during 2014–2023. We use a bootstrap correction data envelopment analysis (bootstrap-DEA), which guarantees a more accurate efficiency estimation than the traditional DEA model. The results show that the average overall (pure technical) efficiency of the seven pilot markets increased from 0.612 (0.844) in 2014 to 0.898 (0.990) in 2023. Furthermore, we document that seven ETS pilots differ remarkably in efficiency and transaction price, whilst all have shortages. Specifically, the small-scale market transaction is the main constraint effect on the average scale efficiency of the ETS. This study provides concrete recommendations for policy makers to consummate institutional designs to improve ETS efficiency.

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