Abstract:At the beginning of the 21st century,China’s central government began to explore the feasibility of SO2 emission trading policy in China,and gradually carried out SO2 emission trading policy pilot in different provinces and cities. Based on the provincial samples from 2000 to 2016,this paper selects the exact time when each province (city) is approved as the national SO2 emission trading pilot unit as the policy intervention time point and evaluates the emission reduction effect of SO2 emission trading policy using the Timevarying DID and PSMDID method. There are three results shown below:First and foremost,the SO2 emission trading policy has significantly reduced the industrial SO2 emission intensity in the pilot area,and improved regional environmental quality,and the conclusion is stable and reliable. Besides,the SO2 emission trading policy achieved emission reduction effect through two pollution control methods,which are the pollution end treatment and production frontend control,and these action paths have strong pertinence to SO2. Last but not least,if the government’s willingness to environmental governance in the pilot areas is stronger,but the actual intensity of environmental governance is weaker,the SO2 emission trading system can play a greater role in reducing emissions,and the improvement of air quality in highly marketoriented areas is more obvious. Therefore,this paper argues that the pertinence,directivity and guidance of emission trading system should be strengthened,and the pilot areas should adjust measures according to local conditions to give full play to the emission reduction potential of marketoriented environmental regulation tools.