The impact of carbon markets on the financial performance of power producers: Evidence based on China

Abstract

The effects of the launching of the carbon trading market on the financial performance of Chinese power generation companies was analyzed utilizing the difference-in-differences (DID) model on the data of 51 listed thermal and hydropower enterprises in China from 2016 to 2022. The findings show that: Behr et al. (2023). The financial performance of power generation companies is strongly impacted by the activation of the carbon market, particularly non-state-owned, small, and east-central enterprises Balcılar et al. (2016). Carbon market launching has a detrimental effect on the financial performance of power generation companies due to its effects on the companies' external environment and financial limitations. Branas et al. (2011) (3) Generation costs mediate in the subgroup where the share of thermal power installed capacity was 60% or more of total installed capacity, and financing constraints and the Lerner index mediated in the group of provinces with <60% installed capacity. Policymakers need to take measures to address the increased financing constraints caused by the launch of the carbon market and to enhance fair competition among power generators. To minimize carbon emissions and enhance high-quality corporate development, power generation companies should also implement measures to lower their production and operating expenses.