The Impact Of Emission Trading System On Enterprise Profits

Reform and opening up have brought huge development opportunities to China,and economy and society has developed rapidly,but the resource-intensive development model has also brought environmental pollution for a long time.In2005,China’s sulfur dioxide emissions ranked first in the world,so it is urgent to control environmental pollution.The government has successively issued a number of guiding opinions.At the 19 th CPC National Congress,General Secretary Xi proposed that China will continue to promote the construction of green ecological civilization and green development.In September 2020,General Secretary Xi delivered a speech at the UNGA that China will work hard to promote carbon peaking and carbon neutrality,and strive to reach the peak of carbon emissions by 2030 and achieve self-offset of carbon emissions by 2060.The relationship between environmental regulation and economic development is the focus of academic research.Previous studies have mostly focused on the environmental effects and rationality of environmental regulations,while the research perspective of this article is at the micro-enterprise level.Specifically,this article studies the impact of emissions trading on corporate profits.This article takes the 2007 pilot policy of sulfur dioxide emissions trading as a quasi-natural experiment to explore whether the impact of the emissions trading system on corporate profits is a "Porter effect" or a "crowding-out effect".Neoclassical economists believe that this kind of environmental regulation will put a lot of pressure on enterprises,increase their costs,and reduce their profits.However,supporters of the "Porter Hypothesis" believe that strict and appropriate environmental regulations will encourage enterprises to carry out technological innovation,thereby increasing productivity,offsetting the costs brought by environmental regulations and enhancing the profitability of enterprises in the market.In order to explore whether the pilot policy of sulfur dioxide emissions trading in 2007 has achieved the "Porter effect",this article uses the companies that emit sulfur dioxide in the Shanghai and Shenzhen Stock Exchanges as samples to conduct research.Through the screening of listed companies,this paper obtains data on 290 companies that emit sulfur dioxide,and uses Difference in Difference method,instrumental variable to carry out a series of robustness tests and heterogeneity analysis.The results find that after the implementation of the sulfur dioxide emissions trading system in 2007,the profits of listed companies in the pilot areas are significantly reduced,causing a certain cost pressure on the enterprises,and the "Porter effect" is not realized.From the perspective of enterprise ownership,the implementation of the emission trading system will have a greater negative impact on the corporate profits of state-owned enterprises.From the perspective of the intensity of environmental law enforcement,it is found that areas with high law enforcement intensity have stricter policy implementation and greater impact on enterprises.From the perspective of industry pollution levels,the emission trading system has a greater impact on corporate profits in high-polluting industries.Through the inspection and analysis of the impact path,it is found that after the implementation of the emission trading system,the company has increased the intensity of green innovation,but the benefits brought by the green innovation have not been able to offset the increased green R&D expenditure,resulting in a decline in corporate profits.At the same time,companies have also increased their total factor productivity.The increase in total factor productivity has not been able to offset the expenditure of intermediate goods and capital,which is also reflected in the decline in corporate profits.Finally,based on the empirical analysis results of the emission trading system,combined with the actual situation of our country and the implementation status of emission trading,this article puts forward the following policy recommendations:First,in the prevention and control of environmental pollution,fully unleash the role of the market economy in environmental governance.Second,increase support for green innovation companies.Third,improve the emission trading system and strengthen the intensity of environmental law enforcement.Fourth,open and transparent information on emissions trading,and establish an online trading market.