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This study aims to explore the direct and indirect impacts of the Carbon Emission Trading System (CETS) on the green transition development (GTD) of Chinese cities. This paper constructs a GTD evaluation system from the perspective of prevention and governance at the source, in terms of carbon reduction, pollution reduction, green expansion and growth, and measures the GTD performance of 281 cities based on the EW-TOPSIS model. It is found that the average increase in GTD of the sample cities from 2006 to 2020 is 3.40 %, the GTD progress of the 281 cities has a considerable positive spatial autocorrelation, with the GTD progress of the CETS pilot cities being significantly bigger than that of the non-pilot cities. Further this paper adopts the spatial difference model (S-DID) to scientifically identify the influence mechanism and heterogeneity of the direct and spatial effects of CETS on city GTD, and the results show that CETS has a positive effect on the GTD of both local and neighboring cities. Propensity score matching (PSM) is used to further corroborate these findings. The study also shows that CETS improves local GTD by promoting green innovation, rationalizing industrial structures, and enhancing energy efficiency in cities. Nevertheless, the ensuing siphon effect hinders nearby cities' levels of energy efficiency, industrial structure rationalization, and green innovation. The policy effects of CETS are more significant in large cities, eastern cities, old industrial areas, and non-resource-based cities. CETS can work in synergy with smart city construction, low-carbon city pilot policies, and emission trading policies to accelerate the process of GTD. [ABSTRACT FROM AUTHOR]

The carbon emission trading scheme (ETS) is an important market-based tool for achieving carbon neutrality. The existing research on the policy effect of ETS focuses on emission reduction effect and economic effect respectively. In view of this, based on the connotations of green development, we embed fairness toward the environment into the green development system to construct a balanced green development index to measure two dimensions, namely, efficiency and fairness. Theoretically understand the synergistic development effect of economic growth and ecological environment quality produced by the implementation of ETS, and analyze the impact of carbon market on balanced green development. A multiperiod difference-in-differences (DID) model explores the impact of China's carbon ETS on the green equilibrium level by using Chinese provincial panel data for the period 2008–2018. First, the results demonstrate that China's balanced green development level is weakly coordinated overall and there is a global spatial agglomeration effect. Second, the carbon ETS has significantly improved the level of balanced green development which promotes the degree of coordination between green economic growth and environmental fairness, offering an effective path that includes efficiency and fairness for green development. Third, there are regional differences in the impact of the carbon ETS on green equilibrium levels. The effect on the western region of China was significantly higher than that of the central and eastern regions of China. Compared with the existing research, the study breaks the single research perspective. From the perspective of efficiency and fairness, we propose improvements in the construction of a national unified carbon emissions trading market to strengthen the balanced green development. This paper provides a theoretical basis and policy reference for deepening China's green and high-quality development under the "carbon peaking and carbon neutrality" goal. [Display omitted] • Evaluation system of Balanced Green Development Index is constructed. • The system was applied to balance green economic growth with environmental equity. • Emission trading scheme has significantly improved the level of balanced green development. • The promotion effect is more obvious in western China. [ABSTRACT FROM AUTHOR]