What is it about?

This study investigates the influence of environmental decentralization, particularly the carbon emissions trading pilot policy, on energy eco-efficiency in China. Using panel data from 257 cities between 2007 and 2020, the authors analyze the direct and indirect effects of environmental decentralization on energy efficiency by employing multiple econometric models, including a super-efficiency SBM model for ecological efficiency and a difference-in-differences (DID) approach to account for policy effects. The findings suggest that the decentralization resulting from the carbon emissions trading pilot policy has generally acted as an obstacle to improving energy efficiency. The negative effects primarily stem from disruptions in technological upgrading and industrial restructuring. However, the study also identifies positive secondary and spillover effects, especially linked to carbon trading, which can boost energy efficiency in other regions. The threshold regression analysis shows that the adverse effects of decentralization intensify as industrial upgrading surpasses a specific threshold. Based on these findings, the study recommends strengthening a multi-level environmental governance system, improving policy coherence, advancing clean energy technologies, optimizing industrial structures, and promoting interregional cooperation to align economic development with ecological efficiency goals.

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Why is it important?

This study is crucial because it provides a comprehensive understanding of the impact of environmental decentralization, specifically the carbon emissions trading pilot policy, on energy efficiency in China. As China strives to meet ambitious climate goals while maintaining economic growth, it is essential to evaluate how decentralized policies affect the country’s energy eco-efficiency. The study highlights both the positive and negative consequences of decentralization, which are often overlooked in traditional policy analyses. By focusing on the mechanisms of technological upgrading and industrial restructuring, the research offers insights into why some regions may struggle to improve energy efficiency despite the policy’s intent to reduce carbon emissions. The study's findings are especially relevant for policymakers seeking to optimize environmental governance systems. The identification of both adverse and beneficial spillover effects underscores the complexity of policy impacts, showing that while some local areas may experience setbacks, other regions can benefit from positive secondary effects. Understanding these dynamics is key to refining and balancing environmental policies, ensuring that they are both effective and equitable across different regions. Additionally, the study’s recommendation for a more integrated and multilevel environmental governance system, along with the promotion of clean energy technologies and industrial upgrades, provides a forward-looking approach that could help China navigate the challenges of decarbonization while fostering sustainable economic growth. Therefore, this research not only contributes to the academic literature but also offers practical guidance for improving environmental and energy policies in China, with potential implications for other countries facing similar challenges in balancing economic development with ecological sustainability.

Perspectives

This study offers several important perspectives for future research and policy development. First, it underscores the need for a nuanced understanding of how decentralized environmental policies, such as the carbon emissions trading pilot, influence energy eco-efficiency. While decentralization has been hailed as a mechanism to promote local environmental initiatives, this research reveals that its impact can be mixed, with both negative and positive effects. This highlights the importance of carefully evaluating the spatial and sectoral dimensions of policy impacts, particularly in the context of large and diverse countries like China. Future research could further explore the mechanisms behind these mixed effects, particularly focusing on the role of technological upgrading and industrial restructuring in shaping energy efficiency outcomes. Additionally, more work is needed to investigate how different regions with varying levels of industrialization and development respond to such policies. Understanding the thresholds at which negative effects become more pronounced could help refine policy design, ensuring that the decentralization process is more tailored to local conditions. From a policy perspective, the study advocates for stronger interregional cooperation and improved policy coherence to mitigate the local negative effects of decentralization. It suggests that a more integrated approach to environmental governance, supported by advancements in clean energy technologies and a sophisticated industrial structure, is necessary for China to achieve both its economic and ecological goals. These insights can inform policymakers globally, especially in other countries with emerging carbon markets or similar decentralization initiatives, as they work to balance economic development with environmental sustainability.

Professor ZHAOYANG LU
Southwest University of Political Science and Law

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This page is a summary of: Spatial effects and mechanisms of environmental decentralization on energy eco-efficiency in china: evidence from a quasinatural experiment on the carbon emissions trading pilot policy, Environmental Sciences Europe, February 2026, Springer Science + Business Media,
DOI: 10.1186/s12302-026-01341-8.
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