Does the Carbon Emission Trading Pilot Policy Enhance Carbon Reduction Efficiency?

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The article “Does the Carbon Emission Trading Pilot Policy Enhance Carbon Reduction Efficiency?” by Wang & Wu is well written and I have a couple of comments on this manuscript. Please address all the comments in your revision. Make sure to highlight the revised parts properly.

I suggest mentioning the GHG Protocol in the manuscript, especially since CE is being estimated and used as a core part of the CRE metric. The GHG Protocol is widely used for emissions accounting globally, so even if the paper doesn't use direct company-reported emissions, it is good to align with or at least reference it. This will also help international readers understand the basis of your emissions estimates and make the methodology look more complete. Maybe just a short mention in the abstract and a broader view of ISO 14064 in the methodology section would be helpful.

In the literature review section, it would be helpful if you could briefly explain how the literature was selected for writing article, especially since the review covers a broad mix of command-and-control and market-based regulations. For example, did you use any specific keywords, databases (like Web of Science, Scopus, CNKI), or a meta-analysis approach when gathering these studies? Even a short mention of this would improve the transparency of your review process and help the reader understand how comprehensive or targeted the literature scan was.

The paper has solid analysis, but adding a few more visuals might help readers follow the story better. Maybe a simple diagram showing the three main mechanisms (green investment, innovation, management) or a timeline of the CET rollout by region? It would break up the text a bit and make things easier to follow. Also, mention which software/program you are using to generate analysis/graphs/visuals.

Please consider presenting the policy implications in a summary table, perhaps divided by short-term versus long-term or by type of intervention (market, technology, management). It would make this section easier to scan and more practical for readers.

Author Response

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Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

This study provides an examination of China’s carbon emission trading (CET) pilot policy, offering valuable insights into its dual impact on corporate carbon reduction efficiency (CRE) and capacity utilization (CU). The use of a generalized difference-in-differences (DID) approach with robust empirical tests strengthens causal inference. However, several areas require for improvement. 

1. The distinction between short-term (≤3 years) and long-term (>3 years) effects in Equations (2) and (3) is arbitrary. A theoretical or empirical basis for selecting a 3-year threshold (e.g., industry adjustment cycles, policy phase-in periods) should be provided.
2. While DID and PSM are employed, the paper does not address potential endogeneity from non-random pilot city selection. For instance, pilot regions may have pre-existing advantages (e.g., economic development, governance capacity) that confound results. A discussion of how regional characteristics might bias estimates and robustness checks (e.g., matching on pre-treatment trends) would improve credibility.
3. The mechanism tests (Table 7) rely on linear regressions but do not establish causal pathways. Mediation analysis (e.g., Baron and Kenny’s approach) or structural equation modeling would better validate whether green investment, innovation, and management efficiency *mediate* the CET-CRE relationship.
4. The definition of CRE is unconventional. While the rationale for combining CU and CE into a single metric is innovative, the paper lacks a theoretical justification for this formulation. A detailed discussion of how this ratio aligns with existing efficiency metrics (e.g., Malmquist-Luenberger index) or economic theory (e.g., joint optimization of environmental and economic outputs) would strengthen validity. The authors should add more recently published related papers about low-carbon development as complementary references, such as: doi.org/10.1080/00036846.2025.2486785. In addition to this, there is a lot of newer literature on carbon emission efficiency that needs to be added.
5. The heterogeneity results (Table 8) highlight differential effects across SOEs, CIEs, and regions but lack explanations for why these groups respond differently. For example, why do SOEs benefit more? Is it due to resource access, regulatory pressure, or political incentives? A deeper theoretical exploration is needed.
6. The use of operating costs to apportion industry-level CE (Equation 15) assumes homogeneity in energy intensity across firms, which may not hold. Sensitivity analyses using alternative proxies (e.g., direct energy consumption data) would strengthen the CE measurement.
7. The exclusion of overlapping policies (e.g., Smart City, Low Carbon City) in baseline regressions (Table 6) is addressed, but the paper does not test for interactions between CET and these policies. A discussion of potential synergies or conflicts would enrich policy implications.
8. The “Price” variable (average carbon price in pilot cities) is included as a control but not analyzed as a moderating factor. Exploring how carbon price levels influence the CET-CRE relationship (e.g., threshold effects) could yield novel insights into market design.

 

Author Response

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Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

Thanks for sharing your paper. Here are my comments:

You’ve done a great job setting the scene, but I think the introduction could be even stronger if you made the research gap more obvious. I’d love to see you highlight more clearly what your work adds that previous studies may have missed.

I think it would be even more compelling if you gave some concrete examples of which SDGs are most impacted, and how your findings support them.

I was curious why you picked those specific cases, maybe a short explanation of why they matter or how they reflect broader trends would make the analysis even more convincing.

In conclusion I’d suggest adding a brief note on what this means for city leaders or what future research could build on your findings.

Thanks again.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

Ok.