Synergetic effect of China’s carbon market policies on pollution reduction and carbon reduction

[Objective] Facing the target constraints of “carbon peak and carbon neutrality”, this paper discusses the impact of different carbon trading policy tools on the effect of pollution reduction and carbon reduction, and provides theoretical basis for the green and low-carbon transformation of regional economy. [Methods] Based on the data of 30 provinces in China’s mainland from 2003 to 2021, this study constructed a coupling coordination model incorporating CO2 and SO2, and applied a two-way fixed-effects difference-in-differences model to analyze the pollution reduction and carbon emission reduction effects of carbon trading policies and their mechanisms. Furthermore, we explored the pollution reduction and carbon emission reduction effects of carbon market policy tools. [Results] The results show that: First, carbon trading policies significantly reduced the coupling and coordination degree between carbon emissions and environmental pollution, resulting in pollution reduction and carbon emission reduction, and gradually tended towards a collaborative relationship of “high-level coupling and high-quality coordination”. Second, the results of heterogeneity test show that the impact of carbon trading policy on the coupling degree and coordination degree of carbon emissions and pollution in Beijing, Shanghai, and Guangdong was greater than that in Tianjin, Hubei, Chongqing, and Fujian, and the impact on the coupling degree and coordination degree of carbon emissions and pollution in areas with relatively low carbon emissions was more significant. Meanwhile, the carbon reduction effect of carbon market policy was higher than that of pollution reduction. Finally, the pollution reduction and carbon emission reduction effects of carbon trading policies were mainly realized by carbon prices, carbon market activity, carbon market size, and punishment tools through the impact of industrial structure, energy structure, and technological progress. Various policy tools also had the effect of optimizing industrial structure, as well as reducing differences between industries, but they did not significantly improve the cleanliness level of energy structure and promote the level of green technology innovation. [Conclusion] In order to achieve a win-win situation of synergetic control of environmental pollution and carbon emissions, it is necessary to take the following measures: Establishing and improving a collaborative control system for carbon emissions and environmental pollution, improving green low-carbon technologies and pollution control technologies, achieving industrial structure upgrading and energy structure transformation, expanding the carbon market scale, and improving carbon market policy tools.