Can the Energy Rights Trading System Become the New Engine for Corporate Carbon Reduction? Evidence from China’s Heavy-Polluting Industries

As global climate change intensifies with unprecedented urgency, nations worldwide have increasingly adopted market-based environmental regulatory instruments to advance carbon reduction objectives. In 2017, China launched energy rights trading pilots, thereby providing a crucial policy instrument for controlling total energy consumption at its source. However, the specific impacts and transmission pathways through which this system influences corporate carbon reduction behavior remain insufficiently explored through rigorous empirical investigation. Drawing upon panel data from heavy-polluting companies listed on the Shanghai and Shenzhen A-share markets, this study employs a difference-in-differences methodology to identify the causal effects of energy rights trading systems on corporate carbon reduction. Our findings reveal that energy rights trading systems significantly reduce corporate carbon emission intensity, generating pronounced emission reduction effects. Further mechanism analysis demonstrates that this system operates through two principal pathways: first, by promoting increased green investment among enterprises, whereby short-term emission reductions are achieved through procurement of energy-saving equipment and environmental protection facilities, and second, by stimulating corporate green technological innovation, whereby long-term sustainable emission reductions are realized through the development of energy-saving technologies and clean processes. Additionally, the research reveals that enterprises with lower financing constraints and stronger supply chain bargaining power respond more actively to policy implementation, with policy effects exhibiting significant heterogeneity. This study not only enriches the theoretical understanding of market-based environmental regulatory policy effects but also provides crucial empirical evidence for improving the energy rights trading system design and enhancing policy implementation effectiveness, thereby offering important policy insights for promoting corporate green transformation and achieving “dual carbon” objectives.