Research On The Impact Of China’s Emissions Trading System On Carbon Leakage Through OFDI In Covered Industries

In recent years,the market-based emission reduction policy represented by emissions trading system(ETS)has attracted much attention because of its flexibility,and has become an important way for China to fulfill the goal of national independent contribution.On the one hand,for developing countries represented by China,the pillar industry at this stage is still a high carbon emission industry,which is more sensitive to environmental constraint policies.On the other hand,ETS has the characteristics of unilateral climate policy,which leads to the production transfer of emission control industries in pilot provinces and cities through OFDI,resulting in the risk of carbon leakage,affecting the process of global climate change governance.Outward Foreign Direct Investment(OFDI)is an important part of the new pattern of China’s comprehensive opening-up,which helps China to layout and integrate resources in the world.The investment scale is one of the indicators to measure regional economic growth.Will the ETS lead to the production transfer of emission control industries in pilot provinces and cities through OFDI due to unilateral emission reduction constraints,accompanied by the risk of carbon leakage,It is an important dimension to evaluate whether ETS can realize the emission reduction effect without affecting the economic growth of the pilot area.In this context,this thesis studies the impact of China’s ETS on the carbon leakage of emission control industries in pilot provinces and cities through OFDI channels,analyzes and discusses its impact path,and pays attention to the heterogeneous effects of industries,regions and host countries.Firstly,it summarizes the relevant research of domestic and foreign scholars,including carbon leakage channels,ETS policy effects,OFDI influencing factors,and the impact of environmental regulation on OFDI.Secondly,starting from the relevant theories of environmental economics and the concept of institutional basis,Pollution Haven Hypothesis and Porter Hypothesis,this thesis constructs a theoretical framework,analyzes the impact mechanism of China’s ETS on carbon leakage through OFDI channel,and puts forward research hypotheses.Finally,based on the relevant data of32 provinces and cities from 2004 to 2015,the hypothesis is empirically tested by using fixed effect regression,difference-in-differences(DID),difference-in-difference-in-differences(DDD),psm-did,intermediary effect model to quantitatively analyze whether ETS has the possibility of causing carbon leakage of emission control industries in pilot provinces and cities through OFDI channels.The empirical results confirm that ETS in China leads to carbon leakage through OFDI channel in pilot provinces and cities,especially in carbon emission intensive industries.In addition,provinces with low degree of marketization are more sensitive to the induced effect of carbon leakage through OFDI channel of ETS,and the pilot provinces and cities tend to invest in host countries with loose environmental constraints.Production cost and technological innovation have been confirmed as two paths of carbon leakage through OFDI channel caused by ETS.Based on the conclusions,this thesis suggests to further improve the carbon emissions trading system in the pilot areas,pay more attention to the policy design of preventing carbon leakage,encourage the use of clean technologies to achieve emission reduction targets,give full play to the positive externality of emission reduction policies and reduce the risk of carbon leakage in high carbon emission industries through OFDI channels.In addition,we need to accelerate the process of marketization and improve the quality of China’s OFDI.