How effective were the Chinese regional emissions-trading schemes? A meta-analytic answer

China is by far the largest CO2 emitter in the world and its emissions keep on rising. This makes China the single-most important country to study the effectiveness of national mitigation policies. One key pillar in China’s effort to reach its Paris targets while maintaining rapid economic growth are emissions-trading schemes (ETS). Starting in 2013, China introduced several regional ETS to inform the introduction of a national ETS. Until the latter was rolled out in 2021, the regional ETS combined were the second-largest ETS in the world. Utilizing China’s regional ETS as unique quasi-natural experiments, a large strand of literature has emerged to rigorously study their effectiveness. In this study, we systematically synthesize the existing evidence from publications written in English and Chinese.
While most studies find that the regional ETS did reduce CO2 emissions, the estimated magnitude of this effect varies greatly. Synthesizing estimates from more than 60 studies through meta-analysis, we find that the true effect of the regional pilots under the assumption of no bias would be an overall reduction of around 14% over a period of around five years. This would imply effectiveness similar to what an OECD report estimated for the second phase of the EU-ETS (Dechezleprêtre et al., 2018). Worryingly, there is strong evidence for a small-study effect, possibly due to publication bias. In order to design future policies, it is important to account for the possibility of publication bias in primary studies. Doing so leads to more pessimistic expectations of what the Chinese ETS may contribute to climate-change mitigation.