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China's carbon emission trading policy plays a crucial role in achieving both its "3060" dual carbon objectives and the United Nations Sustainable Development Goal 13 (SDG 13) on climate action. The policy's effectiveness in reducing pollution and mitigating carbon emissions holds significant importance. This paper investigated whether China's carbon emission trading policy affects pollution reduction (PM 2.5 and SO 2) and carbon mitigation (CO 2) in pilot regions, using panel data from 30 provinces and municipalities in China from 2005 to 2019 and employing a multi-period difference-in-differences (DID) model. Furthermore, it analyzed the heterogeneity of carbon market mechanisms and regional variations. Finally, it examined the governance pathways for pollution reduction and carbon mitigation from a holistic perspective. The results indicate that: (1) China's carbon emission trading policy has reduced CO 2 emissions by 18% and SO 2 emissions by 36% in pilot areas, with an immediate impact on the "carbon mitigation" effect, while the "pollution reduction" effect exhibits a time lag. (2) Higher carbon trading prices lead to stronger "carbon mitigation" effect, and larger carbon market scales are associated with greater "pollution reduction" effects on PM 2.5. Governance effects on pollution reduction and carbon mitigation vary among pilot regions: Carbon markets of Beijing, Chongqing, Shanghai, and Tianjin show significant governance effects in both "pollution reduction" and "carbon mitigation", whereas Guangdong's carbon market exhibits only a "pollution reduction" effect, and Hubei's carbon market demonstrates only a "carbon mitigation" effect. (3) Currently, China's carbon emission trading policy achieves pollution reduction and carbon mitigation through "process management" and "end-of-pipe treatment". This study could provide empirical insights and policy implications for pollution reduction and carbon mitigation, as well as for the development of China's carbon emission trading market. • China's carbon emission trading (CET) policy promotes pollution reduction and carbon mitigation. • Higher carbon trading prices lead to stronger "carbon mitigation" effect. • Larger carbon market scales bring greater "pollution reduction" effects on PM 2.5. • Regional heterogeneity exists on pollution reduction and carbon mitigation. [ABSTRACT FROM AUTHOR]

Although our knowledge of national carbon emission trading system and green certificate trading system are powerful incentive instruments that can deliver on increasingly ambitious climate targets in China, there remains an uncertainty of systems' structural reforms. This study builds on and extends a well-established dynamic computable general equilibrium (CGE) model to incorporate carbon trading system and green certificate trading system into the modeling framework, simulating a diverse of system development pathways further allows an exploration of the many possible policy effect. Then, using total factor productivity as a comprehensive indicator to asses policy effectiveness, the evolutionary trend of comprehensive effects under different paths are separately evaluated to discover the reforms' optimal range. Our work offers main results: First, these instruments provide a price signal. The introduction of a carbon allowance auction drive up carbon prices, while the implementation of a green certificate punishment and the expansion of the trading scope promote an increase in green certificate prices. Second, all policy scenarios that help reduce carbon emission intensity and optimize the power supply structure. However, in achieving the net-zero goal, the green certificate policy incurs more economic costs than the carbon trading policy. Indeed, the combination of multiple policy tools alleviates the decline of social welfare levels. Third, synergism design among policy tools: the focus should be on carbon trading policy from 2021 to 2030, green certificate trading policy from 2030 to 2050, and strengthened policy from 2050 to 2060. Reform measures within policies may need to be introduced in a timely manner. This study offers specific insights and tailored policy proposals to support policymakers in balancing environmental goals with economic and social needs in light of the aforementioned findings. Fig. 1. Introduction of the research questions Fig. 2. Framework of this paper. [Display omitted] • Carbon emission trading and green certificate trading policies were introduced into a dynamic CGE model. • The comprehensive performance of different scenarios were measured using total factor productivity index. • The policy effects of different scenarios were explored from 2020 to 2060. • The even more effective reform measures were adopt, within a single policy. • A sensible mix were proposed, within different policies. [ABSTRACT FROM AUTHOR]