The carbon emission trading policy is a key policy for China to achieve its dual carbon goals. This paper aims to examine the emission-reduction effects

transmission mechanisms

and carbon-market efficiency of China's carbon-emission trading policy from 2012 to 2023. We adopt the difference-in-differences (DID) model to analyze the effects of policy on emissions

and the empirical results from the DID model confirm that the pilot carbon emission trading policy has significantly reduced carbon emission intensity in pilot areas. Then we use the mediation model to study the transmission mechanism of the pilot carbon emission trading policy

and the mediation analysis demonstrates that the pilot carbon emission trading policy achieves emission abatement through four parallel transmission channels: scientific innovation

energy conservation

clean energy substitution

and industrial structure upgrading. Data envelopment analysis evaluates the carbon market efficiency of China. The result shows that the average carbon market efficiency of pilot areas has improved steadily

particularly from 2012 to 2023

especially in Beijing

Hubei

and Guangdong. Moreover

the efficiency of the national carbon market has shown an upward trend since its 2021 launch; it remains lower than the pilot average

constrained primarily by limited sectoral coverage

which impacts scale efficiency.