Trading Scheme Research Articles

Corporate Climate Risk and Membership of Emission Trading Schemes

ABSTRACTUsing a sample of 5364 firms from 65 countries, we demonstrate that membership in the scheme increases firm climate risk. Further analysis reveals that the positive impact of membership on climate risk is pronounced among firms in carbon‐intensive industries. Our findings demonstrate that continental differences and legal origin could moderate or exacerbate the relationship between emission trading schemes (ETSs) and corporate climate risk. Similarly, the positive relationship between ETSs and corporate climate risk is only significant in the period after the Paris Agreement. This indicates that public interest in climate change discussions may have driven membership in the initiative rather than reflecting a real commitment to reducing carbon emissions. Additionally, we show that membership has short‐ to medium‐term effects on corporate climate risk. Our results are robust to a battery of tests such as propensity score matching (PSM) and generalized method of moments (GMM).

Major global carbon emissions trading schemes: a comprehensive review and future directions

Purpose Carbon emissions trading is crucial to meeting carbon neutrality goals and carbon peak achievement. The purpose of this study is to undertake a comprehensive review of major carbon emissions trading schemes globally. Design/methodology/approach Literature review methodology was adopted to obtain documents from Scopus database. Systematic review was undertaken and findings synthesised through content analysis. Scientometric review was also conducted using VOSViewer software. Findings From the findings, the major carbon emission trading schemes that were identified were Chinese Emission Trading System; Safeguard mechanism, Australia; Regional Greenhouse Gas Initiative, USA; California’s cap and trade sector, USA; and UK emissions trading systems. Scientometric analyses undertaken were co-occurrence of keywords, co-authorship of countries and citation analysis of authors. Practical implications This systematic review has theoretical, empirical, practical and wider implications. This study also contributes to climate change mitigation agenda by increasing knowledge on the major emission trading schemes. Application of the principles in these trading schemes will also aid the construction industry meet its emission reduction targets. Originality/value Remarkably, a study that thoroughly reveals and reviews the various carbon trading schemes is lacking and this study fills the gap.

Exploring the spatial effect of China's carbon emission trading scheme on green total factor productivity: An SBM-MML measurement and its decomposition

Exploring the spatial effect of China's carbon emission trading scheme on green total factor productivity: An SBM-MML measurement and its decomposition

Towards sustainable development: The role of the carbon emission trading scheme in improving energy enterprises' carbon performance

Towards sustainable development: The role of the carbon emission trading scheme in improving energy enterprises' carbon performance

The Ethical Implications of AI in Financial Market Surveillance: Are We Over-Monitoring Traders?

The digitization of financial markets has transformed regulatory surveillance through artificial intelligence technologies that monitor billions of daily transactions across global trading venues. These AI-powered systems employ sophisticated techniques including supervised learning, anomaly detection, network analysis, and natural language processing to identify market manipulation more effectively than traditional approaches. While enhancing fraud prevention capabilities for activities like spoofing, front-running, and coordinated trading schemes, these surveillance technologies simultaneously raise profound ethical considerations regarding privacy, data security, algorithmic bias, and potential regulatory overreach. Market participants express concerns about proprietary strategy confidentiality, while regulators face challenges with cross-border data governance and explainability of algorithmic determinations. Technical solutions including federated learning, differential privacy, and explainable AI frameworks are emerging alongside governance mechanisms to balance surveillance effectiveness with ethical considerations, requiring careful implementation to ensure market integrity without impeding innovation or legitimate trading activities.

Anaerobic Digestion of Rice Straw as Profitable Climate Solution Reduces Paddy Field Greenhousegas Emissions and Produces Climate-Smart Fertilizer Under Carbon Trading Mechanisms

Continuous incorporation of rice straw has caused significant CH4 emissions from the paddy field production system in East China. Anaerobic digestion (AD) of the rice straw has been considered as a promising approach that could not only mitigate the land-based CH4 emissions, but also generate low-carbon electricity and high-quality organic fertilizer. However, this approach, in many circumstances, is unable to be cost-competitive with other straw treatment processes or power sources. To understand the potential incentives that recently launched carbon trading schemes, the China Carbon Emission Trade Exchange (CCETE) and Chinese Certified Emission Reduction (CCER), could bring to the rice straw utilization value chain, we conducted a cradle-to-factory gate life cycle assessment and economic analysis of a small-scale AD system with rice straw as the main feedstock in East China. The results indicate that, depending on the choice of allocation method, the climate change impact of the bioenergy generated through the studied small-scale AD system is 0.21 to 0.28 kg CO2eq./kWh, and the digester fertilizer produced is 6.88 to 22.09 kg CO2eq./kg N. The economic analysis validates the financial sustainability of such small-scale AD projects with rice straw feedstock under carbon trading mechanisms. The climate mitigation potential could be achieved at the marginal reduction cost of 13.98 to −53.02 USD/t CO2eq. in different carbon price scenarios.

Real‐Time Tracking of Public Announcements in the Limit Order Book

ABSTRACTWith the growth of information technology, market participants in futures markets can access new information and respond to it at a faster pace. We study the effect of the US Department of Agriculture's (USDA) reports, in real time, on the price discovery of five agricultural commodities. Using the information along the steps of the LOB, we develop a trading scheme to quantify the economic value of the information contained in the USDA reports. Informed traders become more aggressive in their trading strategies when the USDA reports are released during the trading sessions, whereas no impact is observed when reports are released outside the trading sessions. We also find that by incorporating the information embedded in the steps of the LOB when unwinding a large order, additional profits can be obtained on USDA report days. We attribute the additional profits to the information in the USDA reports.

Navigating the Carbon Challenge: Strategic Integration of Hybrid Policies in Green Supply Chains

In the context of climate change, the increasing urgency to mitigate environmental impacts has driven firms to adopt green supply chain strategies. Existing research primarily focuses on either carbon tax or emission trading schemes, leaving a gap in understanding the combined impact of hybrid carbon policies. This study addresses this gap by developing a dual-tier supply chain model with a manufacturer and retailer, exploring the effects of a carbon tax, emission trading, and a hybrid policy on emission reduction strategies and pricing decisions. Using a reverse inductive method within a Stackelberg game framework, we identify optimal strategies for emission reduction and profit maximization under each policy scenario. Results indicate that the hybrid policy achieves the lowest unit carbon emissions when the manufacturer’s initial pollution level is below a critical threshold. This research contributes to the literature by providing actionable insights into the strategic advantages of hybrid carbon policies for firms seeking both profitability and sustainability in green supply chains.

Assessing the impact of the Perform, Achieve, and Trade scheme on energy efficiency in India's iron and steel sector

Assessing the impact of the Perform, Achieve, and Trade scheme on energy efficiency in India's iron and steel sector

The impact of carbon emission trading scheme policy on information asymmetry in the stock market: Evidence from China

The impact of carbon emission trading scheme policy on information asymmetry in the stock market: Evidence from China

Green rules & grey markets: Do environmental policies influence the informal economy?

The relationship between environmental policy stringency and the shadow economy is a critical issue, as stringent regulations can either formalise economic activities or push businesses into informality. This study aims to analyse how different types of environmental policies influenced the size of the shadow economy across 24 countries from 2003 to 2020. This study uses panel data regression techniques, including Fixed Effects and Random Effects models, to evaluate the impact of market-based policies, command-and-control regulations, and environmental taxation on informal economic activities. The results indicate that overall environmental policy stringency is negatively correlated with the shadow economy, with a one-unit increase in policy stringency reducing the informal economy by approximately 2.18 percentage points. Market-based environmental policies, such as carbon trading schemes and financial incentives, are more effective in reducing informality than command-and-control regulations. However, high environmental taxation, particularly sulphur oxide taxes, is associated with an increase in the shadow economy, suggesting that excessive regulatory costs may incentivise tax evasion and informal operations. The study highlights the importance of balancing environmental regulations with economic incentives and governance reforms to ensure both sustainability and economic de-shadowing.

Carbon emission trading scheme and green investor entry: Evidence from China

Carbon emission trading scheme and green investor entry: Evidence from China

Comparisons of emission trading scheme implementation modes in a low-carbon supply chain

Comparisons of emission trading scheme implementation modes in a low-carbon supply chain

Use of Satellite Technology for Forest Cover Area Monitoring in a Blockchain-Based Carbon Trading Scheme

Use of Satellite Technology for Forest Cover Area Monitoring in a Blockchain-Based Carbon Trading Scheme

Tradable performance standards for a greener transportation sector: an economists’ appraisal of the German greenhouse gas mitigation quota

BackgroundThe greenhouse gas (GHG) mitigation quota is a unique instrument in Europe that redistributes money from high emission to low emission fuel markets while forcing fuel distributors to reduce the average emissions of their fuels. This paper presents the design of the German 2022 GHG quota, places it in the context of environmental policy instruments, and examines its impact on the affected fuel markets in relation to other environmental policy instruments. We aim to provide insights that can be applied in industry and policymaking, and to provide a basis for further research, to highlight GHG quota trading as an alternative to allowance trading and carbon taxes. Field research was conducted in the form of expert interviews. Furthermore, intermediaries and brokers were contacted via email and asked for transaction data. In addition, a qualitative literature review was conducted and publications of responsible authorities as well as relevant legal texts were used to gather information.ResultsWe find that the GHG quota trading overlaps with the structures behind emission standards and emission trading schemes and, therefore, falls under the category of tradable performance standards. However, it also contains aspects of a subsidy and interacts directly or indirectly with several different markets.ConclusionsWhile the GHG quota trading system shows potential as an environmental policy tool, its effectiveness is hindered by market complexities and external disruptions. Addressing these challenges through targeted research and policy adjustments could enhance its impact and alignment with broader climate goals.

Carbon emission trading scheme and university technology transfer: does innovation quantity or quality matter?

Carbon emission trading scheme and university technology transfer: does innovation quantity or quality matter?

Carbon Storage Potential and Economic Valuation in the Arboretum of Forest Area with Special Purpose (KHDTK) Aek Nauli, Indonesia

Sustainable forest management is expected to significantly contribute to preventing climate change and supporting the achievement of the Forestry and Other Land Use (FOLU) Net Sink 2030. This study aims to determine the potential for biomass storage and carbon and economic valuation in the Arboretum of Forest Area with Special Purpose (KHDTK) Aek Nauli, North Sumatra, Indonesia. This study used systematic sampling with random start as an inventory method. The estimation of above-ground carbon uptake used general allometric equations and benefit transfer methods for the economic value of carbon. This study found 62 species of woody plants with 5 species classified as endangered according to the International Union for Conservation of Nature (IUCN) Red List of Threatened Species, namely Agathis dammara, Dryobalanops aromatica, Tectona grandis, Pinus merkusii and Saurauia bracteosa. There are 734 individuals of woody plants, including 84% in the tree phase and 16% in the pole phase, with dominant species in both phases, namely Pinus merkusii and Schima wallichii. Potential biomass and carbon stocks in the pole phase were 4.76 tons/ha and 2.24 tons/ha, respectively, while in the tree phase were 338.69 tons/ha and 159.19 tons/ha. The total estimated carbon sequestration reached 592.42 tons.CO2e/ha. Carbon stocks’ total potential economic value is IDR 2,578,832,243 (USD 164,100). Therefore, the Arboretum of KHDTK Aek Nauli is considered to have the potential to support the achievement of the FOLU Net Sink 2030 target. It is expected that the potential economic value of carbon can be converted into real value and optimized through a carbon trading scheme to offset greenhouse gas emissions and support the sustainable management of KHDTK Aek Nauli. Keywords: benefit transfer, biomass, carbon trade, climate change mitigation, economic potential

Green growth transition and carbon neutrality nexus: A comparative study on the top carbon emitters.

This is a comparative study that investigates the role of green growth, green technological innovations, agricultural eco-efficiency and trade openness on carbon neutrality in the top three carbon emitting countries, namely, China, the USA and India, using panel quantile regression with quarterly data for the time period of 2010-2022. The results reveal different findings which have important policy implications. Firstly, carbon emissions vs green growth and carbon emissions vs green technological innovation have a significant U-shaped relationship, which indicate that when green growth and green technological innovations increases, the rate of carbon emissions continues to decline up to a threshold point and start to increase thereafter. Secondly, carbon emissions vs agricultural ecoefficiency has an inverted U-shaped relationship with the carbon emissions, showing that when agriculture eco-efficiency increases the rate of carbon emissions continues to increase up to a threshold point, and starts declining afterwards. Thirdly, trade openness increases the carbon emissions resulting an increase in the environmental degradation and may hinders achieving the carbon neutrality target. The carbon emissions reduction policies such as carbon taxes, promoting green trade, promoting green growth and emission trading schemes must acknowledge and incorporate the interplay among key stakeholders to enhance their effectiveness.

Carbon Policies and Liner Speed Optimization: Comparisons of Carbon Trading and Carbon Tax Combined with the European Union Emissions Trading Scheme

This paper explores how optimizing vessel speeds can help reduce carbon emissions in the maritime industry. Focusing on liner shipping routes between China and Europe, it examines how carbon pricing mechanisms, including carbon taxes and emissions trading under the European Union Emissions Trading Scheme (EU ETS), impact operational costs and emissions reduction. With the use of advanced optimization methods, such as the Non-dominated Sorting Genetic Algorithm-II (NSGA-II) and the Technique for Order of Preference by Similarity to an Ideal Solution (TOPSIS), this research explores the balance between adjusting vessel speeds and minimizing emissions. The findings show that shipping companies on the China–Europe route can reduce the financial strain of carbon pricing by carefully managing speeds and voyage times. This study compares two scenarios of carbon tax policy and carbon trading rights in terms of voyage costs and carbon emissions. The results of this comparison based on the given parameters indicate a reduction of 1124 tons of carbon emissions with the carbon tax policy scenario, while the carbon trading rights scenario allows for more voyages yearly (5.24 vs. 5.30). This demonstrates one policy being more economical, while the other is also more environmentally efficient. These insights support the development of strategies that align environmental goals with economic priorities, paving the way for more sustainable maritime operations. The study introduces its objectives and reviews relevant literature by presenting a detailed methodology, incorporating emissions modeling with clearly defined parameters. The analysis presents results that undergo sensitivity testing and limitations using MATLAB (R2022a version). The study concludes by discussing policy implications and recommendations for future research and practical advancement

Technical, economic, and environmental assessment of CO₂ ship transport in carbon capture and storage.

Technical, economic, and environmental assessment of CO₂ ship transport in carbon capture and storage.