Synergy of Low-Carbon City Pilot and Carbon Emissions Trading in Reducing Pollution and CO2 Emissions: Quasi-Natural Experimental Evidence from Chinese Cities

The low-carbon city pilot (LCCP) and carbon emissions trading (CET) represent two critical policies for reducing carbon emissions. Accurately evaluating their synergistic effects on the reduction in pollution and carbon emissions (RPCE) is of utmost importance for advancing China’s low-carbon economic growth and achieving the dual-carbon objectives. Utilizing data from 279 prefecture-level cities during 2008 to 2021, this study employed a multi-phase differences-in-differences model to investigate the synergistic effects of the concurrent implementation of LCCP and CET (referred to as the “dual pilot” policy) on RPCE. The findings revealed that (1) the dual pilot policies reduced per capita CO2 emissions by 0.644% and PM2.5 concentration by 0.114%, with the dual effect being significantly superior to that of single pilot policies; (2) through mechanism analysis, it was found that technological innovation and clean energy transition served as the principal channels through which the “dual pilot” policy exerted its influence on RPCE; and (3) heterogeneity analysis demonstrated that the “dual pilot” policy was particularly effective in the RPCE in big cities, non-resource-based cities, and highly urbanized cities. This study provides novel empirical evidence supporting the integration of active government intervention with effective market mechanisms to maximize synergies in carbon emission reduction policies and achieve RPCE.