Whether the carbon emissions trading system improves energy efficiency – Empirical testing based on China's provincial panel data

As China faces the challenge of achieving its “double carbon” goal, improving energy efficiency is imperative. Carbon trading system may have a significant impact on energy efficiency in China as a key environmental measure. However, few literatures discuss the role of carbon emission trading system from the perspective of energy efficiency. Using the difference-in-difference model to test whether the carbon trading systems can improve energy efficiency through a quasi-natural experiment. The results show that both static and dynamic effect analysis shows that carbon trading improves energy efficiency. The impact mechanism analysis shows that the system improves energy efficiency by adjusting the energy structure and promoting green technology innovation. Finally, the carbon trading system has a greater impact on improving energy efficiency in the field of high environmental law enforcement and environmental quality. There is some evidence that the “double carbon” goal can be achieved.