Can low carbon policies achieve collaborative governance of air pollution? Evidence from China's carbon emissions trading scheme pilot policy

In the context of environmental and climate governance, the efficiency with which low-carbon policies reduce air pollution is vital for enhancing the effectiveness of environmental policy implementation. Using the emissions trading scheme (ETS), the most representative low-carbon policy in China, as an example, this study employs a panel data set of 250 Chinese cities for the period 2003–2016. Additionally, a spatial difference-in-differences (SDID) model is utilized to explore the ETS pilot policy's impact on sulfur dioxide (SO2) emissions and haze pollution (PM2.5 concentrations) and identify the mechanism underlying these effects. Our results show that the policy helps to reduce both types of air pollution, thereby having a significant collaborative-governance effect. Moreover, while the ETS pilot policy improves PM2.5 concentrations in neighboring cities significantly, it fails to curb SO2 emissions in these areas. The mechanism identification results point to a collaborative-governance effect of the policy via industrial structure upgrading, energy structure optimization, and green technology innovation. According to heterogeneity analysis, while the policy has a more evident impact on air pollution in central and western China, it does not exert a collaborative-governance effect on SO2 emissions in non-key environmental protection and energy-oriented cities. •The collaborative-governance effect of the ETS pilot policy on air pollution is examined.•The mechanisms underlying the collaborative governance effect is uncovered.•The ETS pilot policy helps to reduce local SO2 emissions and PM2.5 concentrations.•The ETS pilot policy improves PM2.5 concentrations in neighboring cities.•Improvements in industrial structure, energy structure, and green technology are the mechanisms.