Emission Rights Research Articles

Low-carbon integrated energy system optimization dispatch considering wind and solar uncertainties

In efforts to mitigate global warming, reducing greenhouse gas emissions represented by carbon dioxide, this paper introduces a stepped carbon trading mechanism for local Integrated Energy Systems (IES) that are not yet engaged in carbon trading markets as a tool for carbon emission rights trading. To minimize both overall system costs and carbon trading expenses, we propose a refined Power-to-Gas (P2G) model that includes a waste heat recovery process. In addition, all gas-fired units within the IES are retrofitted to support low-carbon operations, and a coupled operation mode of carbon capture power plants and P2G is introduced. To manage uncertainties in wind and solar power output, Latin hypercube sampling and K-means clustering methods are employed. Simulation results demonstrate that the proposed scheduling strategy significantly reduces system operating costs while realizing an ∼16.2% reduction in carbon emissions.

The Role and Prospect of Emission Trading in the Optimal Allocation of Environmental Resources

The emission trading system is an important institutional innovation which effectively uses market mechanisms to improve the efficiency of environmental governance, and plays an important role in exploiting the potential of emission reduction for government and enterprise, which would realize the optimal allocation of environmental resources. The study analyses the design mechanism of emission trading system, the crucial parts including verification of emission rights, paid use for resources, emission trading, reserve and control mechanism, as well as management and incentive policies. Thereby, the current problems of emission trading system in China have been found out, including the deficiency of top-level design, ineffective cohesive mechanism between different systems, inactive trading market, and insufficient supporting policy guarantee policy. Based on the development trend of national policies and the practical problems faced by emission trading, the study proposes four prospects for the emission trading efforts. First, the issuance of guidance documents for deepening the emission trading system at the national level is an important foundation for the development of the emission trading system. Second, convergence between the emission rights trading and the emission permit system is the inevitable trend of the development of the system. Third, working on promoting the construction of a trading system dominated by market mechanisms is the focus of the optimal allocation of resources and environment. Last, establishing and improving relevant supporting mechanisms is an important guarantee for the stable development of the emission rights trading market and the efficient allocation of environmental resources.

Optimizing the Allocation of CO2 Emission Rights in the Yangtze River Delta City Agglomeration Region of China Based on Equity, Efficiency and Sustainability

Optimizing the Allocation of CO2 Emission Rights in the Yangtze River Delta City Agglomeration Region of China Based on Equity, Efficiency and Sustainability

Study on the mechanism of green power-carbon market intrinsic coupling and power sector trading strategies

The expansion of carbon market will pose new challenges to the construction of national unified large market and electric-carbon coupling. On the basis of explaining the coupling mechanism of green power and carbon market, this paper analyzes the game relationship and trading strategy between multiple trading entities under the background of carbon expansion. By establishing a multi-agent evolutionary game model, this paper explores the probability change of purchasing green electricity certificate (GEC) and carbon emission right (CET) of thermal power, cement and steel enterprises in the coupled market. The results show that the higher the penalty amount, the higher the probability of cement and steel enterprises to increase the purchase of CET, while the probability of thermal power enterprises to purchase GEC is lower. Compared with the potential income of other subjects, the potential income brought by thermal power's participation in the GEC market can improve the probability of thermal power purchasing GEC. If one party in the coupled market increases the price of CETs, at least one party will reduce the amount of CET purchased. In addition, the discussion found that: penalty differentiation is more conducive to fair market competition and development; From the perspective of emission reduction, timely adjustment of the price difference between CET price and GEC price will be more conducive to solving problems such as the contradiction between market supply and demand and the difficulty of coupling market integration. In short, the integration of the electric-carbon market and the degree of perfection of the market mechanism have an important impact on the equilibrium decision of multi-trading entities under the expansion of the carbon market.

Research on the Correlation Between Carbon Emission Rights and Energy Market: A Case Study of EUA and Oil Market

This study focuses on the importance of the relationship between carbon and oil in the context of global climate change and energy transition. In particular, this paper explores the link between fluctuations in the price of Brent crude oil in the United Kingdom and changes in the European Union Emission Allowances (EUA), which has significant implications for insight into energy market dynamics and policy making. This study uses an autoregressive (VAR) model to analyze the dynamic relationship between the European Union Emission allowances (EUA) market and the oil market from 2018 to 2024. Through Augmented Dickey-Fuller (ADF) stability test, the VAR model is established, the optimal lag order is determined, and the impulse response and Variance decomposition are analyzed. The results show that the EUA market has a short-term positive impact on the response of the oil market. But this effect has diminished over time, indicating the market's ability to self-regulate and stabilize. These findings provide new perspectives for understanding the interaction between global energy markets and environmental policy tools. The findings highlight the importance of considering these market dynamics when developing market strategies and environmental policies.

Influencing Factors and Formation Mechanism of Carbon Emission Rights Prices in Shanghai, China

With the intensification of global climate change issues and increasingly stringent carbon emission controls, carbon emissions trading has become a crucial market-based mechanism for reducing carbon emissions. A deeper understanding of the factors influencing carbon emission rights prices and their formation mechanisms can enhance market transparency and effectiveness and promote the healthy development of the carbon trading market. This paper identifies the main factors affecting carbon emission rights prices and explores their formation mechanisms from both the internal and external perspectives of enterprises. Using a vector autoregression (VAR) model, it quantifies the impacts of energy prices, the climate, and technology levels on carbon trading prices in Shanghai, China. The results show that, in the short term, enterprise technology levels and energy prices significantly impact carbon emission rights prices, while the climate becomes more critical in the medium to long term. These findings propose specific policy recommendations for improving the carbon emissions trading market, with a focus on these three factors.

On the Constitutional Protection of Carbon Emission Right as the Right of Development

Since the development of the second human rights, the right to development, as the third human rights advocated by developing countries, has become popular. Under the two-carbon target, some scholars say that the carbon emission right is the right to development, and it is a basic human right for developing countries. To be sure, with the total amount of carbon emissions fixed, both the speed and level of development are closely related to the amount of carbon emissions allocated. But now double carbon joint agreement distribution unclear terms, developed countries and developing countries demand for carbon emissions and carbon neutral ability difference is bigger, the corresponding management of carbon emissions is more policies and regulations, the lack of host rules of supply, constitutional guarantee, has affected the double carbon under the goal of national development and construction. Therefore, as the right to development of carbon emissions protection should be in the constitution respect and safeguard human rights and the principle and the principle of rule of law as the guidance, establish a sound legal system of carbon emissions, reasonable balance production development and double carbon target relationship, concrete refinement to implement the limit of carbon emissions related laws and regulations, realize the constitutionality of the legal order.

The green trade benefits and horizontal ecological compensation from the perspective of embodied carbon emissions: A case study of the Yellow River Basin, China

The horizontal ecological compensation plays an important role in balancing the interests of all parties and coordinating regional development in the basin. However, the mechanism of ecological compensation based on embodied carbon emissions is still poorly understood. Here, taking the Yellow River Basin as the research area, we use the multi-regional input-output (MRIO) model to measure the embodied carbon transfers between its seven urban agglomerations in 2012 and 2017 from the viewpoint of value-added trade benefits. Further, for the first time, the green trade benefits and ecological compensation amounts are analyzed. The results indicate that: (1) The transfer of trade-embodied carbon among the urban agglomerations in the basin showed obvious spatial heterogeneity and geographic proximity effects, and trade-embodied carbon outflows (inflows) had a pattern of “highest in the midstream, second in the downstream, and lowest in the upstream”. (2) The industry composition of the urban agglomerations in relation to embodied carbon outflows (inflows) was similar, mainly in the service and heavy manufacturing industries. (3) The spatial pattern of green trade benefits in the basin had shifted from “high in the north and low in the surrounding area” to “high in the east-central part and low in the west”. (4) The pattern of ecological compensation in the basin had shifted from the upstream surplus, the middle and downstream deficit to the midstream deficit, and the upstream and downstream surplus. Therefore, we recommend improving energy structures in high-demand urban agglomerations by adopting clean energy, focusing on decarbonization and energy efficiency in resource-rich regions. Additionally, promoting low-carbon economies, especially in the service and heavy manufacturing industries, implementing differentiated emission reduction strategies, and optimizing carbon compensation mechanisms considering regional disparities and resource endowments are crucial. It is expected that the study can enrich the scientific basis of horizontal ecological compensation and increase the fairness of regional carbon emission rights allocation.

Optimal scheduling of a multi-energy complementary system simultaneously considering the trading of carbon emission and green certificate

This paper uses a multi-energy complementary system composed of thermal, wind, photovoltaic power generation, and electric energy storage units to participate in four market mechanisms and construct the optimal scheduling model of these trading mechanisms. These four mechanisms are carbon emission trading, green certificate trading, these two trading that are not joint, and joint. Under the latter two mechanisms, the excess carbon emissions of the system can be reduced to 9258t, and the utilization rate of renewable energy can reach 100 %. However, the operating costs under the fourth mechanism are 9695.80 $ lower than the third one because 5947 pieces of green certificates are converted into carbon emission rights. When the carbon price rises, the cost of the fourth mechanism increases slower than that of the third mechanism. The conversion volume of green certificates increases from 5947 to 10947, and the cost difference between the two increases to 67558.33 $. When green certificate prices rise, the cost under the fourth trading mechanism decreases faster. As that cost steadily declines, the carbon emission rights are converted into 907 green certificates, and the cost difference between this and the third mechanism increases to 4695.52 $.

Does the pilot trading of carbon emission rights cause domestic or international pollution transfer?

The implementation of a carbon emission trading pilot policy has a positive impact on sustainable development but may lead to pollution transfer by enterprises, thereby affecting sustainability. In this study, based on the panel data of Chinese-listed companies from 2007 to 2017, the carbon emission trading pilot policy was treated as a quasi-natural experiment and the Difference-in-Differences model was used to analyze whether these companies engaged in pollution transfer under the policy shock. The results indicated: first, carbon emission trading pilots lead to pollution transfer within mainland China but not across international borders; second, the power and aviation industries exhibited significant pollution transfer phenomena, and the policy also encouraged pollution transfer by non-green transformation enterprises; third, regional heterogeneity further showed that the central region showed no signs of pollution transfer and instead experienced pollution inflow, while the eastern region exhibited significant pollution transfer. Therefore, in designing policy, we should fully consider the phenomenon of enterprise pollution transfer, promote technological innovation, and ensure that carbon emission trading policies achieve emission reduction goals and promote sustainable development.

What does it mean to the environment when a firm mortgages its emission rights? Evidence from corporate green investment

Based on a sample of Chinese heavily polluting firms from 2008 to 2019, we examine the impact of the adoption of the emissions rights mortgage (ERM) policy on firm-level green investment. We find that an ERM policy significantly enhances firms’ green investment. This effect is more salient when financial constraints are higher, local marketization levels are higher, and local governments’ environmental concerns are higher. Our study provides empirical evidence and policy implementations for the further development of financial instruments based on emissions rights and other environmental rights, which show that ERM is a sound policy to promote a sustainable environment.

Techno-economic assessment for the practicability of on-board CO2 capture in ICE vehicles

The transport sector is a major energy-intensive and significant contributor to CO2 emissions. With heavy-duty internal combustion engine vehicles (HD-ICEVs) set to remain a primary mode of transport for goods and passengers, the European Union plans to implement CO2 emission rights starting in 2027 to address this issue. To mitigate CO2 emissions, on-board carbon capture technologies can be an innovative solution, but a comprehensive analysis from several perspectives must be carried out. To tackle the existing knowledge gap on this subject, this paper presents the techno-economic assessment of a CO2 capture and storage system hybridised with an organic Rankine cycle (CCS-ORC) integrated into an HD-ICEV whose technical ability has been previously demonstrated. In this paper, the capture installation based on temperature swing adsorption is designed for two engines with different displacement volumes, at varying carbon capture rates (CCR), and using three different sorbents. The size of the thermal devices is estimated as the determinant factor for the required space and the installation costs. The results show that the heat exchangers can achieve a minimum area density of 100 m2/m3, while the most significant temperature swing adsorption device obtained is scarcely 0.26 m3. The carbon abatement cost (CAC) obtained for the CCS-ORC system is less than 35 €/tCO2 at 100 % of CCR, and with an engine size greater than 18 and 21 L, the CAC of the CCS-ORC system is zero at 100 and 70 % of CCR, respectively. Furthermore, with a CO2 emissions right price above 71 €/tCO2, the projected payback of the initial investment of the CCS-ORC system is achieved in the lifespan of the HD-ICEV for all sorbents evaluated at 100 % of CCR.

The impact of the European Union emissions trading system on carbon dioxide emissions: a matrix completion analysis

Despite the negative externalities on the environment and human health, today’s economies still produce excessive carbon dioxide emissions. As a result, governments are trying to shift production and consumption to more sustainable models that reduce the environmental impact of carbon dioxide emissions. The European Union, in particular, has implemented an innovative policy to reduce carbon dioxide emissions by creating a market for emission rights, the emissions trading system. The objective of this paper is to perform a counterfactual analysis to measure the impact of the emissions trading system on the reduction of carbon dioxide emissions. For this purpose, a recently-developed statistical machine learning method called matrix completion with fixed effects estimation is used and compared to traditional econometric techniques. We apply matrix completion with fixed effects estimation to the prediction of missing counterfactual entries of a carbon dioxide emissions matrix whose elements (indexed row-wise by country and column-wise by year) represent emissions without the emissions trading system for country-year pairs. The results obtained, confirmed by robust diagnostic tests, show a significant effect of the emissions trading system on the reduction of carbon dioxide emissions: the majority of European Union countries included in our analysis reduced their total carbon dioxide emissions (associated with selected industries) by about 15.4% during the emissions trading system treatment period 2005–2020, compared to the total carbon dioxide emissions (associated with the same industries) that would have been achieved in the absence of the emissions trading system policy. Finally, several managerial/practical implications of the study are discussed, together with its possible extensions.

The persistence of environmental and social strategies under emission permits

In this paper, we analyse the long-run industry configuration of an oligopoly where profit-seeking (PS) and environmentally socially responsible (ECSR) firms compete in quantities. We adopt an evolutionary setting to determine the firms’ endogenous choice of statute (PS or ECSR). Pollution is regulated through an Emission Trading System (ETS) scheme that allocates emissions rights to firms. Firms may also invest in emission abatement technology to reduce the cost of emission rights. Our findings show that the introduction of an ETS favours the persistence of the ECSR strategy by reducing the share of PS firms in the industry. In contrast, an increase in the stringency of the ETS policy makes the PS strategy more competitive.

Research on Carbon Emission Right Accounting Issues and Countermeasures

Against the backdrop of global climate change, China is actively promoting the construction of an ecological civilization and green and low-carbon development, and the accounting treatment of carbon emissions trading, as one of the important market mechanisms to achieve this goal, has become increasingly prominent. Although China has issued a number of accounting guidance documents on carbon emission rights trading, there are still a number of challenges and shortcomings, which limit the accuracy and comparability of accounting information and affect market participants' perception of the value of carbon emission rights. This paper firstly outlines the international accounting confirmation and measurement methods for carbon emission rights allowances, and comparatively analyzes China's current relevant regulations, pointing out the controversial points and deficiencies therein. In response to the above problems, this paper puts forward specific suggestions for improvement in the expectation that, to help the development of China's carbon emission right trading accounting system, to improve the quality of China's carbon emission right trading accounting system, to promote the healthy development of the entire carbon market, and to provide a solid accounting foundation for the realization of China's carbon neutrality goal.

Financial network communities and methodological insights: a case study for Borsa Istanbul Sustainability Index

This study investigates the influence of Environmental, Social, and Governance (ESG) scores on the clustering and community formation of companies within various network models. Using daily closing prices of 78 companies operating in the Borsa Istanbul Sustainability Index, we constructed correlation, mutual information (both continuous and discrete), and causality (both linear and nonlinear) networks to analyse intercompany relationships. We performed community detection using the Leading Eigenvector and Girvan–Newman methods, which revealed that companies within the same sector, particularly in the financial and manufacturing sectors, tend to form tight-knit communities. These intra-sectoral clusters reflect strong market behaviour correlations driven by sector-specific factors. Additionally, mixed-sector communities highlighted the presence of significant inter-sector dependencies. To assess the impact of ESG scores on these communities, nonparametric tests such as the Kruskal–Wallis, Conover, and log-rank were applied. Results showed that specific ESG factors, including emission, CSR strategy, innovation, and human rights, significantly influenced community formation. For instance, companies with strong performance in emission reduction and CSR strategies were found to form more cohesive communities, emphasizing the role of sustainability in shaping financial networks. Study findings underscore the critical role of ESG factors in financial market dynamics, promoting sustainable investment practices by highlighting the importance of integrating ESG considerations into investment decisions. These results suggest that sustainability metrics not only affect individual company performance but also contribute to the formation of interconnected communities with shared sustainability practices.

Exploring the Linkage Effects between Coking Coal Futures and Carbon Emission Rights Prices under the Dual-Carbon Framework

Coking coal is a vital energy resource for economic development, with fluctuations in coking coal futures prices significantly guiding spot prices. Additionally, variations in carbon emission rights prices directly affect China's energy conservation and emission reduction efforts. This paper examines the daily trading prices of carbon emission rights and coking coal futures. It utilizes various tests, including the ADF test and cointegration test, and constructs a two-dimensional vector autoregression (VAR) model with a two-period lag. The paper also performs an impulse response function analysis and variance decomposition. Empirical results reveal: First, the daily trading prices of coking coal futures have exhibited a fluctuating upward trend over the past six years; Second, there is a long-term cointegration relationship between coking coal futures prices and carbon emission rights prices; Third, there is no Granger causality between the two; Fourth, fluctuations in carbon emission rights prices have a stronger guiding effect on coking coal futures prices than vice versa. Recommendations include: (1) Strengthening oversight of the coking coal futures market and leveraging policy guidance to prevent extreme prices; (2) Systematically including more participants in the carbon market, optimizing the trading structure, and promoting healthy market development; (3) When developing policies for carbon emission rights, the government should mitigate the impact of price fluctuations on other sectors.

CARBON CREDITS: NEW INSIGHTS, PARADIGM SHIFTS AND DIRECTIONS FOR FUTURE RESEARCH

We identified the principal areas and momentum of the carbon credits research and proposed a future investigation course. Using a bibliometric examination, we analyze a sample of 546 research papers from the ISI Web of Science database to analyze research studies on carbon credits between 2000 and 2019. We found the most persuasive papers and authors based on their publications, citations, region and importance inside the carbon credit framework. We look at the present scenario, discover obstacles to development in the literature on carbon credits and recommend roads for future research. Even though carbon credits research happens universally, an absence of joint exertion exists across country lines, especially between the European and Asian economies. Research on carbon credits centers around Emission trading/Carbon trading under clean development mechanisms and Cap and trade, with relatively less attention on certified emission reductions, emission rights and verified emissions. We conclude by recommending that the research scope of carbon credit research can be enhanced using five potential research headings. Finally, this research would help the firms and management handle “carbon credits” effectively and efficiently.

Field-configuring events and the failure to standardise accounting for carbon emissions

PurposeSince the withdrawal of IFRIC 3 in 2005, there has been a regulatory freeze in accounting for emission rights that contrasts with the international momentum of climate-related financial disclosures. This paper explores how different narratives and institutional dynamics explain the failure to produce guidance on accounting for emission rights.Design/methodology/approachThis paper mobilises the notion of field-configuring events to examine a sequence of six events between 2003 and 2016, including four public consultations and two dialogues between standard setters. The paper presents a qualitative analysis of documents produced in this space that investigates how different practices and narratives configured the field's positions, agenda, and meaning systems.FindingsAccounting for emission rights was gradually decoupled from climate change and carbon markets, relegated to the research pipeline, and forgotten. The obstacles that the IASB and EFRAG found in presenting themselves as central in the recurring events, the excess of representations, and the increasingly technical and abstract debates eroded the 2003 momentum for regulation, making the different initiatives to revitalise the project vulnerable and open to scrutiny. Lukes (2021) refers to nondecision-making to express that some issues are suffocated before they are expressed.Originality/valueThe regulation of accounting for emission rights, an area that has received scant attention in the literature, provides some insights into the different narrative mechanisms that, materialising in specific times and spaces, draw regulatory attention to particular accounting issues, which are problematised and, eventually, forgotten. This study also illustrates that identifying interests is problematic as actors shift from alternative positions over a long period. The case examined also raises some doubts about the previous effectiveness of international standard setters in dealing with matters of connectivity between the environment and finance, as is the case for accounting for emissions rights.

Allocation of CO2 emission quotas for industrial production in Industry 4.0: Efficiency and equity

The method of carbon emission quota (CEQ) allocation based on data envelopment analysis (DEA) can allocate quotas without impacting efficiency improvements in industrial sector. A key element in effectively reducing carbon emissions is ensuring accurate efficiency measurement and equitable allocation of CEQ in the Industry 4.0 era. This paper divides industrial system into two stages: production (which more accurately reflects carbon emissions in production) and trading (which involves in the commercial system). Carbon emission efficiency in the production stage is calculated with a DEA model, with a high degree of accuracy. Given that higher efficiency values correspond with stronger capacity to bear the costs of carbon reduction, a CEQ allocation model is proposed which considers the contribution degree of efficiency. This model is applied to China’s industrial production system. The results show that a CEQ allocation scheme that focuses only on the production stage is more equitable than schemes which treat the industrial system as a black box. In allocation schemes which focus only on the production stage, the central region of China is least able to bear the cost of carbon reduction and receives the most CEQ, and the opposite is true in the eastern region of China. The proposed method not only measures the carbon emission efficiency of industrial production more accurately, but also considers the balanced development of different regions when allocating carbon emission rights. The CEQ allocation scheme based on our model can confidently meet the needs of sustainable development in the era of Industry 4.0.