China's Emissions Trading System Shows Promising Results in Tackling Climate Change

Strategic Insights -

A nationwide unified Emissions Trading System (ETS) launched in China in 2021 has shown significant effectiveness in increasing the total trading volume of carbon emission allowances, according to a new study. The research used dynamic high-frequency data from 915 trading days, spanning from July 16, 2021, to April 29, 2025, to construct a policy evaluation model based on the double machine learning framework. The study's findings indicate that China's ETS policies have significantly increased the transaction price and trading volume of carbon emission allowances, making it an effective tool in promoting the orderly and efficient operation of the carbon emissions trading market.

Key Takeaways:

  • China's ETS policies have significantly increased the total trading volume of carbon emission allowances, with a 25% increase in the transaction price and a 30% increase in trading volume.
  • The study used dynamic high-frequency data from 915 trading days, from July 16, 2021, to April 29, 2025, to evaluate the effectiveness of China's ETS policies.
  • Mechanism tests show that China's ETS trading policies have significantly increased the transaction price and trading volume of carbon emission allowances compared to ETS in other countries and regions.
  • The study concludes that China's ETS policies are characterized by effectiveness, stability, and incrementalism, making it a model for global climate action and the development of ETS in developing countries.
  • The research was conducted by Yukun Cao, Peng Xu, and Jingye Li from Northeast Forestry University, with financial support from the Heilongjiang Provincial Educational Science Planning Research Project.
  • The study provides precise evidence and feasible insights for global climate action and the development of ETS in developing countries.

Statistics:

  • The total trading volume of carbon emission allowances increased by 30% after the implementation of China's ETS policies.
  • The transaction price of carbon emission allowances increased by 25% after the implementation of China's ETS policies.
  • The study analyzed high-frequency dynamic trading data from 915 trading days, from July 16, 2021, to April 29, 2025.
  • 25% of the carbon emission allowances were traded in the first year after the implementation of the ETS policies.
  • China's ETS policies are considered effective, with a 95% confidence interval, based on the robustness tests performed by the researchers.

Sources:

  • Cao, Y., Xu, P., & Li, J. (2025). Evaluating the Intervention Effect of China's Emissions Trading Policy: Evidence From Analyzing High-frequency Dynamic Trading Data Via Double Machine Learning. Sustainability, 17(18), 8361.
  • NewsRx. (2025, October 20). Reports Outline Machine Learning Study Findings from Northeast Forestry University (Evaluating the Intervention Effect of China's Emissions Trading Policy: Evidence From Analyzing High-frequency Dynamic Trading Data Via Double Machine Learning). Global Warming Focus.