The Impacts of China’s Carbon Market on Firms

Wednesday, January 18, 2023
3:30 PM - 5:00 PM
(Pacific)
Philippines Conference Room
Encina Hall, Third Floor, Central, C330
616 Jane Stanford Way, Stanford, CA 94305
Speaker: 
  • Junjie Zhang
A newly built Chinese state-owned coal fired power plant is seen on February 7, 2017 in Liuzhi County, Guizhou province, southern China. A newly built Chinese state-owned coal fired power plant in Liuzhi County, Guizhou province, southern China.

The carbon emission trading system (ETS) is China's cornerstone climate policy instrument. However, it is still largely unknown how the ETS affects firm competitiveness. Using firm-level data such as tax records, industrial surveys, and financial disclosures, guest speaker Junjie Zhang comprehensively assesses the impacts of China's regional ETS pilots on firm environmental and economic performance. The results show that China's ETS reduces carbon emissions despite low carbon prices and infrequent trading. The findings offer no evidence that the ETS negatively affects firm profitability and productivity, but rather directs firm innovation towards climate-friendly technologies, reducing regulatory compliance costs. However, Zhang also explains unambiguous evidence that China's regionally segmented ETS pilots can cause carbon leakage among firms in the same ownership network.

About the Speaker

Junjie Zhang is an Associate Professor of Environmental Economics at Duke University's Nicholas School of the Environment and Director of the Initiative for Sustainable Investment at Duke Kunshan University. He founded and directed Duke Kunshan's Environmental Research Center and International Master of Environmental Policy Program. Before that, he was an associate professor in the School of Global Policy and Strategy at the University of California, San Diego. He was also a Volkswagen Visiting Chair in Sustainability at Tsinghua University's Schwarzman College. His recent research focuses on empirical issues in energy transition, climate change, and green finance. In the past five years, he advised numerous Chinese government agencies at the central and local levels, including the National Development and Reform Commission, the Ministry of Ecology and Environment, the Ministry of Natural Resources, and the China Council for International Cooperation on Environment and Development. His research projects have been supported by NSF, NSFC, NOAA, Energy Foundation, Packard Foundation, ClimateWorks Foundation, US-China Business Council, World Bank, and Asian Development Bank. He holds a B.S. from Renmin University of China, a B.S. and an M.S. from Tsinghua University, and a Ph.D. from Duke University.

  Junjie Zhang

Junjie Zhang

Director Initiative for Sustainable Investment at Duke Kunshan University
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