Can the Carbon Emission Trading Scheme Influence Industrial Green Production in China?

Emission trading schemes are effective methods to realize the sustainable development of society by coordinating economic development and environmental protection. While green total factor productivity (GTFP), an effective evaluation index of green production, involves both economic and environmental factors, which corresponds to the political and market-driven nature of ETS. This study investigated whether ETS policy could affect industrial GTFP and how it works. First, based on panel data of 278 cities from 2003 to 2017, this article first introduces industrial GTFP calculated by the SBM-GML model and EBM-GML model separately. Second, this study realizes that the implementation of ETS policy has significant and positive effects on industrial GTFP by establishing a difference-in-differences model. Third, this study reveals that the implementation of ETS policy may increase the industrial GTFP by affecting the amount of industrial labor, industrial added value, CO2 emission, and industrial wastewater discharge. Fourth, by constructing a TFP index, this study shows that the implementation of ETS policy has no significant impact on the production efficiency of industrial enterprises. Finally, there is regional heterogeneity when studying the effect of ETS policy on industrial GTFP.