Can market-oriented environmental regulation achieve synergistic reduction of atmospheric pollution and carbon emissions? Evidence from China's carbon emissions trading policy

Promoting the synergistic reduction of atmospheric pollution and carbon emissions is of great significance for China to achieve its emission reduction commitments. Based on the emission factor method (EFM), the difference-in-difference (DID) model, and the index decomposition, this paper calculates the integrated emission equivalent of atmospheric pollution and carbon emissions, and explores the impact of carbon emissions trading (CET) on the synergistic reduction effects. The results show that CET can significantly promote the synergistic reduction enhancement. After parallel trend test, endogeneity test, and PSM-DID, the conclusion still holds. Heterogeneity analysis reveals that the synergistic effects are more significant in the eastern and western regions of China. Market mechanism tests show that moderately increasing the penalty for default can promote the synergistic effects, while excessive government intervention has an inhibitory effect. Further analysis shows that the synergistic effects mainly come from energy efficiency and economic development effects, while the synergistic effects of pollution control are gradually strengthening. Examining the synergistic reduction through CET aligns with the concept of green development in China and provides evidence for the coordinated governance of multiple pollutants.