Has China’s carbon emissions trading (CET) policy improved green investment in carbon-intensive enterprises?

This paper develops an intertemporal theoretical model of enterprises’ green investment behavior to reveal the role of carbon emissions trading (CET) in promoting enterprise green investment. Then, based on the panel data of China's carbon-intensive listed enterprises in 2009–2017, this paper employs the difference-in-differences (DID) method to empirically evaluate the effect of CET on enterprise green investment and discusses the regional and industrial heterogeneity of this effect. The results indicate that: first of all, in theory, China’s CET can improve the green investment ratio of CET-covered enterprises; however, in the sample period, the CET reduced green investment ratio by 0.4% in CET-covered enterprises. Second, the CET increased the green investment ratio of CET-covered enterprises in Hubei by 12%, but decreased the green investment ratio by 4% and 49% in Guangdong and Tianjin, respectively, and it had no significant effect on enterprise green investment in other CET pilots. Third, the CET had a subtle promotional effect on the green investment of CET-covered enterprises in chemical and nonferrous metal industries, with the opposite effect on other carbon-intensive industries.