Regional Carbon Market Development under Carbon Peaking and Carbon Neutrality Goals: Evidence from the Middle and Lower Yangtze River Region

Abstract

Promoting green and low-carbon economic and social development is essential for high-quality development. As a key policy instrument for achieving carbon peaking and carbon neutrality, carbon markets continue to face institutional deficiencies, limited financial development, and insufficient regional coordination. Using data for four provinces and one municipality in the middle and lower reaches of the Yangtze River from 2013 to 2023, this study employs a continuous difference-in-differences (DID) model to examine how changes in the secondary and tertiary sectors affect the coordinated development of regional carbon markets and how policies supporting these climate goals influence carbon prices. The baseline regressions are supplemented by analyses of carbon price dynamics, potential endogeneity, mediation, and regional heterogeneity. The findings indicate that structural changes in the secondary and tertiary sectors significantly promote regional carbon market coordination. Although industrial upgrading operates with a time lag, its long-term contribution is substantial. Policies supporting carbon peaking and carbon neutrality encourage firms to reduce carbon emissions and exert a significant positive influence on carbon prices; however, data limitations and the short sample period constrain the identification of long-term effects. Based on these findings, this study recommends establishing an integrated framework for regional carbon market coordination, improving carbon pricing mechanisms, and promoting coordinated low-carbon upgrading in the secondary and tertiary sectors. These recommendations provide a reference for advancing coordinated, high-quality carbon market development in the study region and supporting the achievement of China’s climate goals.