The impact mechanism of the ETS on CO2 emissions from the service sector: Evidence from Beijing and Shanghai

Abstract The service sector has a vital role in achieving emissions reduction, but existing studies on emission trading scheme (ETS) seldom consider CO2 emissions from service sector. Among the seven ETS pilots in China, those in Beijing and Shanghai cover the service sector. This paper focuses on the Beijing and Shanghai pilots and divides the service sector into the transportation sector and the other service sector. After that, it integrates the synthetic control method and the intermediate approach to analyze the impact mechanism of the ETS on the CO2 emissions from the service sector. The results show that the ETS has a negative effect on CO2 emissions from the service sector in China, but the abatement effect is heterogeneous by region and sector. Meanwhile, during the sample period, the impact mechanism of the ETS on CO2 emissions from the service sector is carbon emission reduction efficiency.