Carbon Emission Trading System Research Articles

Does the carbon emission trading system facilitate public building carbon dioxide emission reduction in China?

Does the carbon emission trading system facilitate public building carbon dioxide emission reduction in China?

Risk Spillover in the Carbon-Stock System and Sustainability Transition: Empirical Evidence from China’s ETS Pilots and A-Share Emission-Regulated Firms

This study employs the TVP-VAR-BK-DY spillover index model to investigate the risk spillover effects between China’s carbon emission trading system (ETS) pilots and A-share listed emission-regulated enterprises. The findings reveal that, due to the nascent stage of China’s carbon market, the overall risk spillover level within the “carbon-stock” system remains low; however, dynamic risk spillovers have shown an upward trend driven by the advancement of ETS pilots. In particular, during compliance periods, enterprises that exceed their emission limits must purchase sufficient allowances on the carbon trading market to avoid high penalties for non-compliance. This creates substantial demand, which drives a rapid increase in the spot prices of carbon allowances, triggering intense short-term price fluctuations and risk spillovers—a pronounced “compliance-driven trading” effect. Frequency domain analysis indicates that long-term shocks have a significantly greater impact on the market than short-term oscillations, reflecting moderate information processing efficiency within the “carbon-stock” system. Directional spillover analysis shows that A-share enterprises initially absorb risks from the carbon market in the short term, but over the long term, they transmit part of these risks back to the carbon market, forming a significant bidirectional risk transmission relationship. Furthermore, heterogeneity analysis reveals marked differences in risk spillover contributions among firms associated with different ETS pilots, as well as between enterprises with polluting behaviors and those with high ESG scores, with the latter contributing considerably higher spillovers to the overall carbon market. These findings offer nuanced insights into the dynamic, structural, and firm-level characteristics of risk spillovers, providing valuable guidance for policymakers and investors to enhance market stability and optimize investment strategies.

The impact of multiple emission reduction policies: Evidence from the coexistence of carbon emission trading system and white certificate

The impact of multiple emission reduction policies: Evidence from the coexistence of carbon emission trading system and white certificate

Price Determinants in the Global Emissions Trading Systems: A Systematic and Bibliometric Review

The Carbon Emissions Trading Price (CETP) is crucial in the Carbon Emissions Trading System (ETS). This study conducts a systematic and bibliometric review of 57 articles to explore the Determinants of Carbon Emissions Trading Price (DCETP) in global ETSs. The study revealed a substantial increase in the number of pertinent publications since 2018, driven by the expanding carbon market. China leads in contributions, although author collaboration is still limited. The analysis shows that energy factors are the most influential DCETP, while economic indicators, market policies, and environmental variables also play key roles. Methodologies are evolving, with recent research focusing on predictive models and advanced econometric techniques to address fluctuations in CETP. The research focus is shifting from the EU ETS to emerging markets such as China, highlighting the need for context-specific studies due to differences in the impacts of determinants across markets and models. This review integrates fragmented research, offering insights for policymakers and academics to optimize ETS design, enhance price stability, and support the low-carbon transition. Future research should prioritize new determinants, cross-market comparisons, and interdisciplinary theoretical integration.

Research on the Selection of Carbon Quota Trading Modes for Shipping Enterprises under the EU Emissions Trading System

Against the background of the global emphasis on carbon emission reduction, the reform of the European Union's carbon emission trading system (EU ETS) will be incorporated into the shipping industry from 2024, which will have a significant impact on the operation of shipping enterprises. In this context, China's shipping enterprises urgently need to choose an appropriate carbon emissions trading model to effectively respond to the impact of the EU ETS, so as to accelerate the low-carbon transformation. Based on this, this paper constructs the Gounod competitive game model of two shipping companies under the baseline scenario and the cooperative strategy scenario, takes into full consideration the key factors of the shipping companies' market potential, cost, carbon emission quota and price in the model, and researches on the choice of carbon quota trading modes of the shipping companies under the EU ETS, such as purchasing emission allowances or cooperating with other companies to obtain allowances, etc. The equilibrium transportation of the shipping companies under different scenarios is also studied, and the impacts of different scenarios are also examined. The equilibrium volume, price and profit of shipping companies under different scenarios are solved, and MATLAB is applied to numerically analyze the decision-making variables of the model to further analyze the potential impact of EU ETS on the shipping industry. The results show that EU ETS policies always have a negative impact on traditional shipping companies, while sustainable shipping companies are affected.

Carbon emissions trading system and the cost of equity for high-carbon firms

PurposeAlthough an increasing body of research has examined the role of emission trading systems (ETS) at the macroeconomic level and their various effects at the firm level (Liu et al., 2022; Zhang et al., 2023; Ni et al., 2022; Huang et al., 2024; Ren et al., 2024), there remains a lack of systematic empirical analysis on the specific impact of pilot implementations in different regions on the cost of equity for high-carbon firms, particularly when accounting for varying levels of regional economic development and firm characteristics. Therefore, this study employs a difference-in-differences (DiD) approach to systematically analyze the impact of ETS pilots on the cost of equity for high-carbon firms.Design/methodology/approachFrom late 2013, several regions initiated carbon ETS pilots. ETS’s phased and orderly implementation provides an excellent quasi-natural experiment for formulating a DID model. The pilot regions span China’s eastern, central and western areas, covering various stages of socio-economic development, effectively representing China. To examine the impact of ETS on the cost of equity for high-carbon firms, we use a staggered DiD approach.FindingsWe find that the implementation of ETS significantly increases high-carbon firms’ cost of equity. Investors request more compensation for the increased stock return volatility, reduced operating cash flows and heightened distress risks following ETS. The effect is more pronounced for firms with severe financing constraints, while it is alleviated in state-owned enterprises and firms with higher institutional ownership. Additionally, the effect of ETS is stronger in areas with better governance capacity and economic conditions.Originality/valueFirst, this paper complements to some extent the literature on the microeconomic consequences of carbon trading systems. Second, this paper has some policy implications by discussing the heterogeneity of ETS effects at firm and regional levels. We find that ETS had a greater impact on non-state-owned enterprises, suggesting that the government should support the transformation of non-state-owned enterprises by providing targeted assistance for complying with carbon-trading regulations and promoting green economic growth. Additionally, we find that ETS is more effective in economically developed areas with good governance capacity, which means that the government should tailor local carbon trading policies to each region’s governance and economic conditions and avoid a one-size-fits-all approach.

Green-process vs. green-product innovation: the diverse impact of the carbon emission trading system

ABSTRACT Although green innovation can be categorized into green-process and green-product innovation, prior research has not fully examined how market-based environmental regulations affect them. Using a sample of Chinese-listed firms from the Shanghai and Shenzhen Stock Exchanges between 2007 and 2021, in this study, we investigate the effects of a carbon emission trading system (ETS) on green-process and green-product innovation. Exploiting the exogenous shock from the pilot phase of the ETS, we find that the policy significantly boosts green-process innovation but has no discernible effect on green-product innovation. Notably, the positive impact is stronger for firms exposed to higher carbon emission prices. Our findings contribute to the literature by highlighting the varying effects of market-based environmental policies on various types of innovation. From a policy perspective, our results indicate that the carbon market should include targeted measures to stimulate both process- and product-oriented green innovation, thereby maximizing environmental gains across diverse pathways.

Carbon policy and firms' OFDI in the digital era: Insights from China.

ObjectiveCreating a low-carbon economy has become an essential goal in fostering green development. In the context of achieving sustainability, in 2014, China implemented a carbon emission trading system (ETS) to conserve energy and reduce emissions. This study examined the effect of the carbon ETS on the outward foreign direct investment (OFDI) of Chinese listed firms.MethodsThis study employed a difference-in-differences approach using the data of Chinese listed firms from 2010 to 2017. The data were sourced from the CSMAR database. Firms located in the trial areas of the carbon ETS were considered the treatment group.ResultsThe carbon ETS had a significant positive impact on firms' OFDI, even after several robustness checks. The carbon ETS positively influenced the OFDI of private firms, firms not belonging to polluting industries, and highly profitable firms but not the OFDI of state-owned firms, firms belonging to polluting industries, and less profitable firms. Technological innovation mediated the impact of the carbon ETS on firms' OFDI but increased production costs did not. Digitalization enhanced the positive effects of the carbon ETS on firms' OFDI.ConclusionThe results present vital implications for deepening two-way investments across economies in the era of digitalization. Developing governments should actively promote carbon emission trading policies and digitalization to help enterprises realize green transformation and improve their competitiveness in "going global."

Can market-based environmental regulation promote corporate intelligent transformation: Evidence from the carbon emission trading system

Can market-based environmental regulation promote corporate intelligent transformation: Evidence from the carbon emission trading system

Stability analysis of carbon emission trading mechanism in China based on a tripartite evolutionary game

This study investigates the evolution and stability of China’s carbon emission trading system, addressing disparities between China’s carbon market development and international practices. By constructing a three-party evolutionary game model involving the government, enterprises, and consumers, this paper identifies key factors influencing system stability and offers policy recommendations. The main contributions include: (1) Developing a dynamic model that incorporates consumer behavior, including the herd effect, to reveal the interplay between demand-side dynamics and market evolution. (2) Demonstrating that government regulatory costs, consumer preferences, and enterprise investment costs significantly impact market stability and green transitions. (3) Highlighting that carbon prices alone have limited influence on enterprise participation, underscoring the importance of comprehensive incentives. This work provides actionable insights to optimize policy design, enhance market efficiency, and promote low-carbon transformation in China.

Carbon Emissions Trading Policy and Regional Energy Efficiency: A Quasi-Natural Experiment from China

The carbon emission trading system (ETS), as a market-based environmental regulation tool, remains the subject of ongoing theoretical debates and empirical gaps regarding its impact on energy efficiency and the underlying mechanisms. This study focuses on China’s carbon emission trading pilot policies, utilizing panel data from 30 Chinese provinces between 2003 and 2023. The SBM-undesirable model is employed to assess energy efficiency, and the difference-in-differences (DID) model is applied to identify the causal effects of the policy. Additionally, a mechanism-testing model is utilized to explore how the carbon emission trading policy enhances energy efficiency. The findings indicate the following: (1) overall energy efficiency in China has remained relatively stable over the past two decades, but high-efficiency regions exhibit significant regional clustering effects; (2) the carbon emission trading pilot policy has significantly improved energy efficiency in the pilot regions, with a dynamic trend of “shock–enhancement–stability”, reaching its peak effect in the third year post-implementation; (3) the mechanism analysis reveals that the policy primarily enhances energy efficiency through three channels: promoting green technology innovation, advancing the use of clean energy, and strengthening government environmental regulation. This study not only provides empirical evidence to support the optimization of carbon market policies but also offers a practical framework for developing countries to design emission reduction mechanisms that align with their economic structures and policy environments.

Optimal Scheduling of Integrated Energy System Based on Carbon Capture–Power to Gas Combined Low-Carbon Operation

In this paper, an IES optimal cooperative scheduling method based on a master–slave game is proposed considering a carbon emission trading (CET) and carbon capture system (CCS) combined operation with power to gas (P2G). We analysed the behaviour of integrated energy system operators (IESO) and energy suppliers (ES) when the system is operating in different states. This paper first introduces the structure of IES and the mathematical model of the game frame. Secondly, mixed integer linear programming and particle swarm optimization (MILP–PSO) are used. The final simulation results show that in the main scenario, IESO and ES have an income of CNY 181,900 and CNY 279,400, respectively, and the actual carbon emission is 106.75 tons. The overall income is balanced, and the carbon emission is in the middle. The results provide a reference value for operators and users to make decisions.

Carbon Emission Trading System and Corporate Tax Avoidance

Carbon Emission Trading System and Corporate Tax Avoidance

Why did the Chinese government introduce the carbon emissions trading scheme, and to what extent has it been effective in controlling carbon emissions in China?

By constructing the panel data of 30 provinces in China, this research studies the reasons for the introduction of a carbon emission trading system in China and to what extent this system affects the reduction of carbon emissions. The government has taken measures to control carbon emissions in line with the global climate goals China joined the world in the Paris Agreement and the national goal of achieving carbon neutrality by 2026. However, the ineffectiveness of the carbon tax policy could not achieve the government’s goals, so the carbon emission trading system was established. This research uses the DID model to evaluate the effectiveness of the carbon emission trading system. Through the benchmark regression results, it can be concluded that the carbon emission trading policy can promote the reduction of carbon emissions in Chinese provinces. Through the heterogeneity test, it can also be concluded that this policy has a greater impact on the eastern provinces of China, while it has almost no impact on the central region. This research provides policy implications for China facing carbon emission reduction.

The Impact of Green Finance Policies on Carbon Emission Trading

In the context of increasingly severe global climate change, the international community's demand for reducing greenhouse gas emissions is urgent. This paper explores the critical role of green finance policies in guiding capital flows to green and low-carbon areas. In order to achieve carbon reduction goals under the global climate change context. The main content of this paper includes how green finance, through green credit and green bonds, promotes the activity and efficiency of carbon emission trading, thus significantly affecting carbon emission intensity. Additionally, it details the policy background, development process, and challenges faced by the carbon emission trading system, including issues such as limited industry coverage and insufficient market liquidity. Finally, it proposes policy recommendations and future prospects, such as improving laws and regulations, promoting technological innovation, and expanding market coverage, and strengthening international cooperation to further optimize the carbon emission trading market and help achieve sustainable development goals.

The Role of Carbon Trading in Enhancing Enterprise Green Productivity and ESG Performance: A Quasi‐Natural Evidence From China

ABSTRACTThe carbon emission trading system (CETS) efficiency in increasing enterprise green productivity is attracting significant interest. This study proposes implementing a carbon‐emissions pricing system in China, viewing it as a quasi‐natural experiment. It investigates the aforementioned prone from a corporate green total factor productivity (GTFP) perspective. This article uses a sample of A‐share listed businesses from 2005 to 2021 from the Shenzhen and Shanghai exchanges. The research confirms that the CETS enhances the GTFP. Furthermore, the CETS has a threshold effect on enterprise green total factor productivity determined by carbon market efficiency. It also reveals that green innovation and resource allocation efficiency mediate the CETS‐GTFP link. Further analysis shows that the CETS promotes GTFP more when firms are more diversified, state‐owned, and have lower Environmental, Social and Governance (ESG) ratings. This article highlights the microeconomic implications of the carbon emission pricing system, which can help construct a national carbon market and enhance green development initiatives.

Localization vs globalization of carbon emissions trading system (ETS) rules: how will China’s national ETS rules evolve?

Localization vs globalization of carbon emissions trading system (ETS) rules: how will China’s national ETS rules evolve?

How the establishment of carbon emission trading system affects ship emission reduction strategies designed for sulfur emission control area

How the establishment of carbon emission trading system affects ship emission reduction strategies designed for sulfur emission control area

The Impact of the EU Carbon Border Adjustment Mechanism on Chinas Exports and Suggestions on Countermeasures

The European Parliament plans to gradually introduce the Carbon Border Adjustment Mechanism in 2023, with a complete implementation set for 2026. As an essential trading partner of the EU, China will shoulder an additional carbon border tariff due to the lack of low-carbon technology and the dependence on extensive development patterns. These extra costs will undermine the profit margins of Chinas carbon-intensive industry sectors, possibly resulting in decreased exports and a restructuring of production. The latest estimate of the exact costs of Chinas embedded carbon exports to the EU is a problem that has received limited academic attention. Using the IPCC carbon emission accounting methodology and non-competitive single-region input-output analysis, this research precisely measures the embedded carbon in Chinas exports to the EU for the nine most affected industries. Furthermore, this study quantifies the impact of the CBAM on Chinas exports of these nine industry sectors. The findings suggest that China should improve the domestic carbon emission trading system and take the initiative to participate in formulating a carbon pricing consultation and dialogue mechanism, mitigating the negative impact of the EU CBAM on exports.

How effective is the carbon pricing implementation in ASEAN Member States to reduce regional emissions

Abstract At the Conference of the Parties of the UNFCCC (COP 27), the ASEAN Member States (AMS) reaffirmed their commitment to the Paris Agreement by pledging to achieve net zero or carbon neutrality targets by 2050. According to the 7th ASEAN Energy Outlook (AEO7) study, ASEAN’s GHG emission will rise 3.7-fold to 6,704 MtCO2-eq in 2050 from 1,815 Mt in 2020. This will require all AMS to scale up their efforts to reach their greenhouse gas (GHG) emission target, and one of them is by introducing carbon pricing to smoothen the transition by encouraging more renewable energy use. Currently, some AMS have already introduced or proposed carbon pricing. Singapore has introduced carbon tax implementation since 2019. Indonesia has been stepping up its commitment to enforce both carbon tax and emission trading system (ETS) by introducing numerous supporting policies. Malaysia, Thailand, and Vietnam are anticipating launching ETS as their latest climate action plan. A question on how effective carbon pricing implementation to reduce regional emission may come up and this paper shed lights to answer this question through expert interviews and literature reviews. The findings indicate that carbon pricing may reduce emissions, especially from power generation and manufacturing industry, and support the transition to a low-carbon economy, helping the region reach carbon neutrality or net zero targets by 2050.