Carbon pricing or non-pricing for developing countries? A dual-track strategy for decarbonization in China

ABSTRACT

Unlike the decarbonization trajectories adopted by developed countries, some research suggests that non-pricing policies should be prioritized over pricing policies to mitigate carbon emissions in developing economies. This paper enriches the current literature on carbon pricing by empirically linking China’s carbon pricing and non-pricing policies, using a difference-in-differences approach. The results indicate the effectiveness of the carbon pricing strategy. Furthermore, by introducing an interaction effect model, we find that a higher carbon price will significantly increase the carbon emission abatement effects. In conclusion, the findings highlight the necessity of carbon pricing instruments for decarbonization in developing countries.

KEYWORDS:

• Carbon pricing
• non-pricing
• decarbonization
• carbon emission

JEL CODES:

• P28
• Q56
• Q58

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from the publication.

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [72101253]