Search

The study examines the relationship and linkages between spot and future prices of European Union Emission Trading Systems (EU-ETS) during 2019–2021. Dynamic conditional correlation specification of multivariate generalized autoregressive conditional heteroskedasticity (MGARCH) model was employed to examine the time-varying correlation between spot and future prices. Also, vector autoregression mean model and MGARCH-Baba-Engle-Kroner-Kraft volatility model was jointly estimated to model the spillover between EU ETS spot and future prices in the first and second moments. Lastly, we utilize the variance-covariance matrix of joint mean-variance model estimation to derive the optimal conditional hedge ratio as well as the hedge effectiveness of EU ETS future contracts. Our findings reveal a high conditional correlation and significant spillover between carbon spot and future markets in EU. Further, our study uncovers a high degree of hedge effectiveness for EU ETS future contracts. This is possibly the first study that examines the linkages between EU ETS spot and future prices pertaining to the recent transition stage of phase III and the initial stage of ongoing phase IV of the ETS market. Our findings pinpoint to ETS markets becoming more complete and in turn offering optimal hedging avenues. JEL Codes: G15, C58, Q38 [ABSTRACT FROM AUTHOR]

How to finance the Green Transition toward net-zero carbon emissions remains an open question. The literature either operates within a market-failure paradigm that calls for carbon taxes or cap-and-trade to help markets correct themselves, or via war finance analogies that offer a "triad" of state intervention possibilities: taxation, treasury borrowing, and central bank money creation. These frameworks often lack a thorough conceptualization of endogenous credit money creation and disregard the systemic and procedural dimensions of financing the Green Transition. We propose "Monetary Architecture" as a more comprehensive framework that perceives the monetary and financial system as a constantly evolving and historically specific hierarchical web of interlocking balance sheets. Using the United States as a case study, we stress the importance of a systemic financing dimension that uses all available elasticity space in the monetary architecture while considering a division of labor between firefighting balance sheets such as central banks or treasuries and workhorse balance sheets such as off-balance-sheet fiscal agencies or shadow banks. Procedurally, public workhorses should provide an initial balance sheet expansion and crowd in the rest of the monetary architecture, notably shadow banks, for long-term funding. Firefighters should prevent systemic instability and manage a possible final contraction. [ABSTRACT FROM AUTHOR]

This paper studies when and under what conditions the actions undertaken by the power plants involved in China's emission trading scheme (ETS) pilot became cost effective. Based on unique plant-level panel data and the difference-in-differences strategy, we identify that an insignificant initial reduction in cost efficiency occurred at the announcement stage for power plants in the pilot provinces; however, the cost efficiency of the pilot plants increased significantly following formal policy implementation. Additionally, the by-stage treatment effects differed across the pilot provinces due to localized market and non-market variations. Localized conditions of higher marketization, stricter policy enforcement, and lower carbon dependence enhanced this positive effect. The synthetic control results confirmed this variation in the policy effects. The carbon trading pilots resulted in improved efficiency in power plants in Shanghai, Guangdong, and Tianjin during the period 2013--2017, with an associated total cost saving of approximately 29.75 million RMB. To enhance the efficacy of the ETS policy, our findings suggest that the design of the policy should consider localized external factors. [ABSTRACT FROM AUTHOR]

Under neoclassical assumptions, this paper develops a model to illustrate the effects of government use of carbon allowances for carbon emission control. We find that control using the instrument of issuing long-term carbon allowances does not produce the same good results in the Decentralised Equilibrium as in the Planning Problem. Thus, while Coase's Theorem ensures that the Pareto optimum is maintained in an economy with multiple agents, it does not align the social development with the economic optimum of the planner. We believe this is due to the that the price of carbon allowances is determined by asset profiles of investors rather than externalities. The steady-state under the special pathway shows that consumption is determined by the rate of technological progress, the total amount of carbon dioxide at steady-state, the level of technology at which steady-state is reached and the total amount of carbon allowances remaining. The comparison with the optimal tax path reveals that the price of carbon allowances has increased too quickly, leading to excessive consumption of fossil fuels in the early stages. [ABSTRACT FROM AUTHOR]

Emission trading policies can provide environmental incentives for businesses, leading to a reduction in pollution emissions and promoting sustainable environmental development. Previous research indicated the significant impact of market-based environmental regulations on emission reduction by businesses, however, there is a lack of in-depth examination from the perspective of overall corporate management efficiency. In this study, we conducted research using the 2007 SO2 emission trading pilot program as a quasi-natural experiment to investigate the mechanisms and effects of emission trading systems on corporate resource allocation efficiency. The study found that the implementation of emission trading systems significantly improves corporate resource allocation efficiency. Furthermore, through market regulation and administrative supervision mechanisms, corporate resource allocation efficiency can be further enhanced. However, emission trading systems have heterogeneous effects on resource allocation efficiency, with a stronger promotion effect on optimizing resource allocation in cases of greater financing constraints and higher levels of corporate governance. This study provides important policy insights for further promoting market-based environmental regulation reforms and improving corporate resource allocation efficiency. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of residential CO2 emissions, which are not covered by the European Union Emissions Trading System (EU ETS), in 19 European countries between 2000-2017. Using both static and dynamic panel models, we found strong relationships between CO2 emissions per capita, GDP per capita, energy prices and heating needs. We then assessed the impact of European carbon taxation and show that a €20/tonne CO2 tax lowers emissions by 1% on average. We found that this tax affects countries differently in terms of tax revenue-to-GDP ratio. Poland and the Czech Republic would have to pay the highest contribution, and Portugal and Denmark the lowest. Finally, we propose a scenario that equalizes countries' tax burdens. We show that, were Europe to redistribute all tax revenues, the main beneficiaries would be Poland and Belgium, while Denmark and Luxembourg would have to pay a surtax. [ABSTRACT FROM AUTHOR]

This paper constructs a unique dataset of clean energy and adopts static panel models and dynamic panel specifications to explore the correlation between clean energy and CO2 emissions. Furthermore, this paper employs the interaction term of pilot areas and pilot time as the proxy of emission trading policy to examine the effect of China's emission trading pilot on clean energy. Then, this paper conducts quasi-natural experiments on CO2 emissions. Our findings show a negative correlation between CO2 emissions and clean energy. We also find that China's emission trading pilot has a significant impact on promoting clean energy. In addition, empirical results affirm that emission trading market pilots can help decrease CO2 emissions. Finally, we put forwards relevant policy recommendations. [ABSTRACT FROM AUTHOR]

This study investigates the relationship among technology innovation, emission trading schemes, and carbon productivity based on data from firms participating in the Korean Emission Trading Scheme. First, the total factor carbon productivity based on stochastic frontier analysis is estimated by industry and it is confirmed that changes in carbon productivity vary by industry. Based on the estimated carbon productivity, panel data analysis is conducted to determine the effects of innovation and environmental policy on carbon productivity. The results show that R&D investment and environmental policy play an important role in promoting carbon productivity. In this study, the factors affecting carbon productivity are also analyzed by industry. Comparative analysis across industries confirms that factors affecting environmental performance vary by industry. Innovation does not significantly affect carbon productivity in assembling industries, but in the process industry, R&D investment plays an important role in increasing environmental performance. [ABSTRACT FROM AUTHOR]

We are facing both a short-term emergency cooling crisis and a long-term greenhouse gas (GHG) draw down planetary ecological crisis. We must address both. The first requires emergency direct cooling, or temporary "triage" or a "tourniquet, for our bleeding planet." The second requires rapid GHG emissions reductions and draw down and natural planetary regeneration that realistically will take at least a few decades and may take a century or more. Conflating the challenge and opportunity of the second crisis with a response to the first crisis will not produce a rapid and credible global response to the second crisis because of structural economic inequity and fossil fuel dependency that is deeply embedded in the current global economy. Realistically, we need emergency direct climate cooling to address the first crisis and a long-term binding global cap and trade emissions trading system to address the second. The Florin proposal that conditions Stratospheric Aerosol Injection (SAI) direct climate cooling on credible GHG emissions and draw down is a step in the right direction, but omits other direct climate cooling methods and effectively makes the deployment of SAI contingent on a global emissions trading system (ETS) that may not be possible before the deployment of SAI becomes necessary. Rather than conflating our two climate crises, or conditioning the solution of the first on a solution to the second, we need to address both on an emergency basis by putting all options on the table as called for in the Healthy Planet Action Coalition (HPAC) proposal. JEL Classification : Q54, Q55, Q56, Q57, Q58 [ABSTRACT FROM AUTHOR]

Coal-fired power industry is under enormous pressure to accomplish carbon emission reduction targets. This paper proposes a bi-level multi-objective model for co-firing biomass with coal under carbon cap-and-trade regulation which considers a leader-follower Stackelberg game between the authority and the coal-fired power plants. The upper level regards social welfare maximization and allocation satisfaction maximization as its multiple objectives, while the lower level attempts to maximize the profits of each coal-fired power plant. The inherent uncertainty prompts the motivation for employing fuzzy set theory to characterize the uncertain parameters and determine their exact values. A case study from Shandong Province, China is provided to demonstrate the practicality and efficiency of the optimization model. ε -constraint method and interactive algorithm are used to solve the model, and furthermore the solutions associated with different free carbon emission quota levels and minimal allocation satisfactions have been generated to examine the influences. Based on the analysis and discussion, the methodology can meet the carbon emission reduction goals and transit to a lower-carbon power generation. It also assists the decision makers to develop desired quota allocation strategy in accordance with their attitudes and actual conditions. [ABSTRACT FROM AUTHOR]

With increasing global pressure on transition to carbon neutrality, various technical and policy efforts such as emission trading scheme and carbon tax are being made to improve energy productivity. Yet, there are not many literatures that analyze determinants of firm-level energy productivity, which is an important issue as energy use in industry accounts for one fourth of global carbon emission. This study investigates factors affecting energy productivity such as technology innovation, environmental policy and energy price based on firm-level data from the Korean Emission Trading Scheme (KETS). The total factor energy productivity is estimated by industry based on stochastic frontier analysis (SFA) and panel data analysis is performed to identify determinants of firm-level energy productivity. The results show that energy productivity in Korea has been improved since 2016, and technical progress and environmental policy play an important role in promoting energy productivity. In addition, analysis identifying industry-specific characteristics is performed as their production process and energy consumptions structures vary. The result shows that innovation activity does not significantly affect energy productivity in process industries, but it does in the assembling and high technology industries. This paper implies that policy design reflecting industry-specific characteristics is important to improve energy efficiency more effectively. [ABSTRACT FROM AUTHOR]

A diverse range of regulatory schemes in climate policy has produced a fragmented and crowded governance landscape. Devising pathways towards converging all of the different climate governance approaches would be a Herculean task, but it is argued here that this should not inhibit efforts to scale up regulatory initiatives in specific areas of climate governance. In this respect, it is argued that linking emissions trading schemes (ETSs) would significantly contribute to the development of creating more durable and connected climate governance arrangements. At present, the global expansion of ETSs raises risks of potential regulatory divergence, conflict, and the emergence of a disconnected patchwork of schemes. However, the expansion of trading schemes has also brought an increased interest in the feasibility of linkage between ETSs. This opinion argues that, in the absence of a comprehensive multilateral regime governing emissions trading, policymakers and scholars must instead refocus on the challenges of creating a coherent climate governance architecture from the bottom-up. It further suggests that the development and implementation of durable linkages between ETSs are critical building blocks in this quest. [ABSTRACT FROM AUTHOR]

Based on the panel data of 277 cities between 2003 and 2017 and a unique city-level dataset of green patent applications, this study employs the difference-in-differences (DID) method to evaluate the effect of China's carbon emission trading scheme (ETS) pilots on urban green innovation. The findings indicate that China's ETS pilots have a positive impact on urban green innovation, and that impact is more significant for municipalities than for prefecture-level cities. Furthermore, the impact on different categories of urban green innovation is heterogeneous. More specifically, China's ETS pilots have significantly spurred urban green innovation that is closely related to energy conservation and emission reduction, including alternative energy production, transportation, energy conservation and so forth. Moreover, the facilitating effect of China's ETS pilots on urban green innovation suffers from a lagging effect, which began to show a significant positive effect in 2016. Overall, this paper identifies the effect of China's ETS pilots on urban green innovation, and suggests that the government should consider the heterogeneity of urban green innovation when designing national ETS policies. [ABSTRACT FROM AUTHOR]

Market power in electricity and emission-permit markets in the South-East Europe Regional Electricity Market, which comprises both EU members subject to the EU Emissions Trading System (ETS) and non-EU members exempt from it, affects social welfare and carbon leakage. We examine its impact under three market settings: perfect competition (PC) and two leader-follower versions, in which a leader can exert market power in either the electricity market (S-T) or both the electricity and permit markets (S). Under PC, carbon leakage is equal to 11%-39% of ETS emission reduction depending on the cap stringency. Generally, in S-T, the leader's capacity withholding results in ETS emissions below and non-ETS emissions above PC levels. However, carbon leakage is lower vis-à-vis PC as the ETS emission reduction offsets the non-ETS emission increase. Finally, in S, the leader's propensity to lower the permit price increases ETS emissions and exacerbates carbon leakage compared to S-T. [ABSTRACT FROM AUTHOR]

This study aims to analyze the behavior of Chilean industrial sources when a CO2 tax, an emissions trading system with a total reduction target of 30%, or both instruments simultaneously are applied. For the above, an optimization model is built that is then calibrated with firm -level data obtained from the Annual National Industrial Survey (ENIA). Specifically, the model assumes that industrial sources have the option of maintaining their original emissions, replacing their current fuels with less polluting ones to pay fewer taxes and/or trade of emissions in a carbon market. The results show that to reduce emissions by at least 30% a tax close to US $17.5/tCO2 could be applied with a total cost of US $106 million, but it would be better to apply an emissions trading system with a similar price because the total cost would be US $21.3 million. If both economic instruments are applied together, the total cost of reduction is higher than when the instruments are implemented independently. Thus, it is concluded that Chile could move from a CO2 tax to an emissions trading system in order to reduce the costs of its environmental regulation. [ABSTRACT FROM AUTHOR]

Power generation under the Renewable Portfolio Standard (RPS) can reduce greenhouse gas emissions below the baseline level, so entities may argue to use this attribute to meet the goal of Emission Trading Scheme (ETS). Although these two quantity-based regulation systems have different policy objectives, both mechanisms are implicitly linked by credit conversions depending on credit prices. This paper builds an analytic partial equilibrium model and derives market equilibria in a closed form to demonstrate how each mechanism influences the other by policy instruments such as a renewable requirement, a reduction target in greenhouse gas emission, levels of penalties, or marginal costs. We can compare "direct vs indirect" effectiveness of a regulatory changes across both markets with the case where converting renewable offsets are completed prohibited. [ABSTRACT FROM AUTHOR]

Neoliberal capitalism has extended the use of markets to address climate and energy issues. Carbon trading characteristically exemplifies the neoliberalization of climate policy. This paper discusses the workings of the European Union's Emissions Trading System (EU ETS) in the European Union (EU) with a focus on its application in crisis-ridden Greece. Beyond environmental effectiveness and distributional effects, the paper explores the interactions of the EU ETS with crisis, austerity programs, energy poverty, and uneven development. Despite adjustments and changes, the EU ETS continues to indicate limited environmental effectiveness and unjust distributional effects. Moreover, by forging a centralized neoliberal transition to a low-carbon economy without consideration of the issues faced by unevenly developed and crisis-stricken EU members such as Greece, the EU ETS leads to additional disturbances and problems for the Greek economy as a whole, its pauperized working people, and its energy and climate options to reduce emissions on its own potential, needs, and priorities. [ABSTRACT FROM AUTHOR]

This study simulates the short-run effects of an Emissions Trading Scheme (ETS) and two auxiliary policies on the Chinese tourism industry. The results show that the ETS alone will increases energy prices and have significant adverse impacts on China's economy. The adverse impacts are relatively stronger on the energy sectors than they are on tourism. Two auxiliary policies—a tourism subsidy and a reduced goods and services tax (GST)—are examined as policy options to soften the negative impacts of the ETS. Results show that the tourism-subsidy policy is more effective than the GST reduction policy. [ABSTRACT FROM AUTHOR]

The presence of market power usually has negative impacts on the cost-effectiveness of the carbon market. As market power-induced efficiency loss depends on permit allocation, the choice of permit allocation methods is likely to affect the cost-effectiveness of the carbon market. This paper examines theoretically how the choice of emission permit allocation method affects the cost-effectiveness of an emissions trading system when market power exists. We find that, under grandfathering and benchmarking, the carbon market would be more efficient if the permits initially allocated to the dominant firm were closer to its CO2 emissions. Under auctioning, the dominant firm tends to lower the CO2 price, which may result in efficiency loss. By combining the modelling results of efficiency loss due to market power and the fairness in terms of CO2 cost pass-through, we finally provide some policy recommendations on how to choose a CO2 emission permit allocation method for different industries. [ABSTRACT FROM AUTHOR]

Emission trading scheme is known as a cost-effective measure for mitigating CO2 emissions, and recently, China has started the world's largest carbon trading system. As the most influential industry in determining China's overall CO2 emission level, the thermal power industry will be greatly affected by nationwide carbon market in the near future. This paper explores the impact of the upcoming national emission trading scheme on China's thermal power industry at firm level. First, based on empirical data of 478 thermal power plants, an empirical analytical framework of micro-firm level is constructed. Then, two kinds of policy scenarios, including no carbon emission trading and national emission trading scheme, in two different market structures have been analyzed. The results show that emission trading scheme have positive impacts on reduction of CO2 emissions among China's power plants and can reduce the total abatement costs by 0.37%–41.5%. Furthermore, most of the thermal power plants are emissions permits buyers including all the low-emission gas-fired power plants. Additionally, compared with the perfect competition market, more than 70% of thermal power plants increase their total abatement costs in imperfect competition market. These findings provide reference for promoting the development of nationwide carbon emission trading system in China. [ABSTRACT FROM AUTHOR]

The paper selected the carbon emission trading yields data from 2014 to 2017 in Shenzhen. A generalized autoregressive conditional heteroscedasticity model was used to find the best way to hedge the risk of spot carbon emissions in Shenzhen carbon emission trading exchange market. The variances of carbon spot and coal futures were first examined. The dynamic hedging rate was calculated too. The results showed that according to the actual data and market change strategies, the dynamic hedging rate is better than the optimal hedging rate that can hedge risk better. The carbon emission trading yield was found to exhibit aggregate fluctuation; in addition, the dynamic hedging can better hedge risk timely than static hedging. This provides investors with the basis for decision-making to hedge risk in carbon emission trading and helps investors to maximize their returns under certain risk conditions. [ABSTRACT FROM AUTHOR]

We investigate the direct role of technological innovation and other factors influencing industrial energy intensity across 17 EU countries over 1995-2009. We develop an innovative industry-level patent dataset and find compelling evidence that patent stock negatively influences industrial energy intensity. In particular, we find a much stronger effect of patent stock on energy-intensive industries with an estimated coefficient of -0.138 which almost double that of less energy-intensive industries (estimated at -0.085). While our results show that energy price remains the major determinant of energy intensity, the chemicals industry, which is not covered by the EU Emissions Trading Scheme (ETS) during the sample period, appears more susceptible to energy prices relative to other energy-intensive industries that are covered by the EU ETS. Exploring regional differences in carbon taxation, we find a significant decline in energy intensity in Northern Europe owing to the carbon tax policy implemented in the early 1990s across the Nordic countries. [ABSTRACT FROM AUTHOR]

American political parties frequently advance contradictory arguments in policy debates, but scholars know relatively little about where these arguments originate. Outside research-producing institutions are likely culprits. Have the research and advocacy efforts of these groups helped structure policy discussions along party lines, thereby contributing to partisan polarization? I answer this question by tracing the diffusion of policy language related to cap-and-trade regulations across actors and over time. Utilizing quantitative network and text analysis techniques, as well as qualitative textual analysis, I find that outside groups inform policy discussions through their early research. First, prominent organizations develop ideas and talking points that then spread to other groups. Second, members of Congress adopt these talking points and use them to justify their views to their constituents. Importantly, the diffusion of arguments is most likely among actors with shared partisan commitments, resulting in two relatively cohesive and distinct partisan communities that advance partisan policy narratives. These findings have important implications for our understanding of partisan polarization, outside group influence, and the capacity for Congress to address meaningful public problems. [ABSTRACT FROM AUTHOR]

Considering the multiple effects of product greenness and carbon emission trading, this article constructs a differential game model to study the collaborative innovation between enterprises in a green supply chain composed of one manufacturer and one supplier. This article examines the optimal green technology innovation strategies, optimal revenues of manufacturers and suppliers as well as the overall green supply chain revenues in the Nash non-cooperative game model, the Stackelberg master–slave game model, and cooperative game model, respectively. Through the comparative analysis of equilibrium results, it is found that the optimal strategies of suppliers and manufacturers as well as the total revenue of the green supply chain in the cooperative games are better than those in the non-cooperative game scenario. Meanwhile, undertaking part of suppliers' green innovation cost by manufacturers is the Pareto optimization mechanism that increases the total revenue of the green supply chain and their respective revenues. The research results of this article provide theoretical support for green supply chain enterprises to formulate incentive mechanisms for scientific strategy-making and reasonable revenue distribution. [ABSTRACT FROM AUTHOR]

To launch the nationwide emission trading scheme, some provinces in China were approved to design their pilot work for emission trading scheme according to local circumstances. Shanxi Province is the only pilot area with provincial trading market for industrial soot and dust emissions. This paper investigates the effect of Shanxi Pilot emission trading scheme on industrial soot and dust emissions by using the synthetic control method. The idea behind the synthetic control approach is to construct a combination of comparison cities to approximate the emission paths that the cities in Shanxi would have experienced in the absence of the pilot emission trading scheme. We demonstrate that, following Shanxi Pilot emission trading scheme, industrial soot and dust emissions fell markedly in Taiyuan, Datong, and Linfen relative to the synthetic counterparts. The finding that emission trading scheme can help achieve emission reduction targets is shown to be robust to the reduction in the number of control units, placebo tests, and difference-in-differences estimation. [ABSTRACT FROM AUTHOR]

This paper is an empirical investigation of the role of banks in the EU Emissions Trading System (EU ETS). This topic is of particular interest considering that banks are responsible for a large and increasing share of overall transactions under the EU ETS and that they provide regulated companies with services related to emissions trading. Using both semi-structured interviews as well as descriptive and regression analysis, we investigated the different roles banks play in EU emissions trading and whether their importance as trading partners differs in relation to different types of regulated companies. Our regressions based on data from the first trading period of the EU ETS show that large companies with trading experience are more likely to choose a trading strategy involving interaction with a range of financial intermediaries, in particular banks or exchanges, than smaller, less professionalized companies, which tend to follow a trading strategy involving brokers (in particular for selling allowances). These findings can help policymakers decide on the level of involvement of non-regulated companies in their systems, which is currently allowed to varying degrees under different ETS. We recommend that this decision should be closely linked to provisions of market oversight and the level of control over the different types of financial players active in emissions trading. [ABSTRACT FROM AUTHOR]

This paper uses a sample of 1,867 firms that participate in the "Top-10,000 Energy- Consuming Enterprises Program" in China and aims to identify strategic traders in its pilot emissions trading scheme. Firms included in the ETS can exert their market power and manipulate allowance prices to achieve low compliance costs, which will consequently influence the effectiveness of this platform. This is of great importance to regulators or designers of this system in identifying these strategic traders and understanding their impact. We follow the basic principle proposed by Godal (2005) and develop a simple and implementable empirical procedure to study firm-level data from seven pilot programs in China. The results show that strategic traders exist with clear regional and sectoral differences. As a consequence of strategic trading by these firms, the overall volume of trading falls remarkably, with a clear increase in total compliance costs. [ABSTRACT FROM AUTHOR]

We investigate the combined effect of an Emissions Trading System (ETS) and renewable energy sources on investments in electricity capacity in energy-only markets. We study the long-term capacity expansion decision in fossil fuel and renewable technologies when electricity demand is uncertain. We model a relevant tradeoff: a higher share of renewable production can be priced at the higher marginal cost of fossil fuel production, yet the likelihood of achieving higher profits is reduced because more electricity demand is met by cheaper renewable production. We illustrate our theoretical results comparing the optimal solutions under a business-as-usual scenario and under an ETS scenario. This illustration shows under which limiting market settings a monopolist prefers to withhold investments in renewable energy sources, highlighting the potential distortionary effect introduced via an ETS. Our conclusions remain unaltered under varying key modelling assumptions. [ABSTRACT FROM AUTHOR]

In this study, we consider the sulfur dioxide emissions trading pilot scheme (SETPS) of China, with pilot provinces as the treatment group and other provinces as the control group. We employ the difference-in-differences method to estimate the effects of the SETPS on pollution mitigation and economic growth. Results show that the SETPS plays a robust role both in China's industrial sulfur dioxide abatement and in economic growth. Furthermore, by applying regression analysis to explore regional heterogeneity, we find that it has a stronger effect on industrial sulfur dioxide reduction in the Central China than it does in the Eastern and Western China, and it also exerts a positive influence on economic growth in the Western China. Moreover, a time-trend analysis indicates that the pollution reduction effect of the SETPS has decreased, while the economic growth effect has slightly increased since 2007. [ABSTRACT FROM AUTHOR]

The distinction between subsistence emissions and luxury emissions was originally devised in 1992 to guard people so poor as to be able to afford only fossil fuels from being priced out of energy by market mechanisms like cap-and-trade that were proposed to assist with limiting climate change. Non-carbon energy can now be made as affordable and accessible as fossil fuel, but tensions remain between measures to support sustainable development and measures to control climate change. Consequently, the distinction between subsistence energy and luxury energy continues to be surprisingly relevant to current international political struggles. The most fully justified method for normative assessment of Nationally Determined Contributions under the Paris Agreement, the Climate Equity Reference Framework, presupposes the distinction. Normative evaluation of the choice between maximally ambitious ratcheting-up of Nationally Determined Contributions in the immediate future and lazy reliance upon hoped-for carbon dioxide removal in future decades depends on it. [ABSTRACT FROM AUTHOR]

Tradeable permit systems for allocating rights to impact the environment have become an important part of the regulatory toolkit over the last 35 years. Informed by elegant neoclassical economic thought, these regulatory markets promise lowest-cost environmental benefit by delegating decision-making to market participants. This article examines tradeable permits systems, including cap-and-trade carbon markets, tradeable water quality permits, and individual transferable quotas for fisheries, to understand the actual outcomes of attempts to transfer environmental governance to markets. Drawing on heterodox economic thought and the neoliberal natures literature, this article examines the institutional forms tradeable permit systems engender in conjunction with a neoclassical definition of ‘market’ to provide an internal critique of environmental marketization. In general, tradeable permit systems do not facilitate highly liquid financial markets that might signal the increasing importance of regulatory markets as an accumulation strategy for capital. Instead, market-based regulation tends to behave rather differently, acting as performance standards, quotas, or environmental taxes. The article concludes by reflecting on the political possibilities afforded by the recognition that regulatory markets, for the most part, bear little resemblance to high-flying financial markets. [ABSTRACT FROM AUTHOR]

In light of the 2015 Paris Climate Agreement, this project synthesizes and advances critiques of the possibility of a sustainable capitalism by adopting an explicit ‘negative’ theory of ideology, understood as ideas that conceal contradictions through the reification and/or legitimation of the existing social order. Prominent climate change policy frameworks – the ‘greening’ of markets (market-corrective measures), technology (alternative energy, energy efficiency, and geoengineering), and growth (the green growth strategy) – are shown to conceal one or both of the two systemic socio-ecological contradictions inherent in the current social formation: (1) a contradiction between capital’s growth-dependence and the latter’s degrading impact on the climate (the ‘capital-climate contradiction’) and (2) a contradiction between the potential of using technological infrastructure that aids in emissions reductions and the institutionalized social relations that obstruct this technical potential (the ‘technical potential-productive relations contradiction’). Attempts to reform the very techniques and institutions that brought about the climate crisis will remain ineffective and reproduce the social order that results in climate change. After proposing a way in which societies might move out of the ideological trappings of green markets, technology, and growth, two alternatives are proposed: economic degrowth coupled with Marcuse’s conception of a ‘new technology’. [ABSTRACT FROM AUTHOR]

European wholesale electricity prices have dropped by nearly two thirds since their all-time high around 2008. Different factors have been blamed, or praised, for having caused the price slump: the expansion of renewable energy; the near-collapse of the European emissions trading scheme; over-optimistic power plant investments; a decline in final electricity consumption; and cheap coal and natural gas. This ex-post study of European electricity markets from 2008 to 2015 uses a fundamental power market model to quantify their individual contributions on day-ahead prices. The two countries we study in detail, Germany and Sweden, differ significantly: fuel and CO2 prices were important price drivers in Germany, but in Sweden it was electricity demand. This difference is explained by the nature of the hydro-dominate Nordic electricity system. In both countries, however, the single largest factor depressing prices was the expansion of renewable energy. At the same time, Germany's nuclear phase-out had an upward effect on prices. If one defines the Energiewende as the combination of these two policies, its net effect on power prices was negligible. [ABSTRACT FROM AUTHOR]

Spain and Portugal are highly dependent on energy from abroad, importing more than 70% of all the energy they consume. This high energy dependence could involve important effects on the level and stability of their electricity prices as a half the gross electricity generated in both countries came from power stations using imported combustible fuels (such as natural gas, coal and oil). In general, changes in the prices of these fossil fuels can directly affect household electricity prices, since generation costs are likely to be transmitted through to the wholesale electricity market. Moreover, in the framework of the European Union Emission Trading System, electricity production technologies tend to incorporate their costs of carbon dioxide emission allowances in sale offers with the consequent increase of the electricity prices. The objective of this paper is to analyze the influence of fossil fuel costs and prices of carbon dioxide emission allowances in the EU on the Spanish and Portuguese electricity prices. With this aim, a maximum entropy econometric approach is used. The obtained results indicate that not only the price of imported gas are very important in explaining Spanish and Portuguese electricity prices but also the price of carbon dioxide emission allowances in the EU. [ABSTRACT FROM AUTHOR]

Transfer of development rights (TDR) is seen as an important tool for land use planning, in large part because it leverages market mechanisms. TDR extends market concepts used primarily in emissions trading programs to the arena of land use. However, with the exception of a handful of success stories, TDR programs generate few transfers. Although researchers generally attribute the weak performance of TDR to program design flaws, this study demonstrates that the unique conditions presented by urban land markets explain, in part, why TDR programs often underperform. I present a case study of a TDR program in Sarasota, Florida, to address two questions. First, what attributes of urban land markets may impact TDR program design and outcomes? Second, is TDR a planning tool that can achieve desired planning goals, given the conditions of land markets? I find that the unique features of land markets—specifically (1) the sensitivity of development to timing; (2) imperfect information, uncertainty, and speculative activity; (3) unique features of land; (4) the limited number of buyers and sellers; and (5) the development orientation of urban political and planning institutions—distort the market for transferable development rights. The Sarasota case demonstrates how local land market characteristics contributed to a set of incremental program design and implementation decisions that, in sum, amounted to significant departures from fundamental program principles and mechanisms. These resulted in imperfect market conditions and rendered the TDR program ineffective. [ABSTRACT FROM AUTHOR]

In a world of uneven climate policies, concerns about carbon leakage and competitiveness for heavy industries are the main arguments against the implementation of ambitious climate policies. In this paper we investigate a potential competitiveness- driven operational carbon leakage due to the European Union Emissions Trading scheme (EU ETS). We focus on two energy-intensive sectors, cement and steel, and phases I and II of the EU ETS. From a simple analytical model, we derive an equation linking net imports of cement and steel to local and foreign demand along with carbon price. We then econometrically estimate this relation both with ARIMA regression and Prais-Winsten estimation, finding that local and foreign demand are robust drivers of trade flows. We find no significant effect of the carbon price on net imports of steel and cement. We conclude that there is no evidence of carbon leakage in these sectors, at least in the short run. [ABSTRACT FROM AUTHOR]

The intention of this paper is to (i) introduce a multi-regional dynamic emissions trading model and (ii) examine the potential impact of an emissions trading scheme (ETS) on the long-term evolution of energy technologies from national and regional perspectives in China. The establishment of this model is a salutary attempt to Sinicize the global integrated assessment model that combines economy, energy, and environment systems. The simulation results indicate that: (1) for majority of regions, ETS is more effective in cutting CO2 emissions than a harmonized carbon tax (HCT), but this might not be true for the entire country, which means that these two options have little difference in overall carbon reduction; (2) carbon tax policy is a more cost-effective option in curbing CO2 with respect to ETS in the long run; (3) neither ETS nor pure carbon tax provide enough incentives for the breakthrough of carbon-free energy technologies, which illustrates that matching with some other support policies, such as subsidies and R&D investment, is essential to extend the niche market; and (4) In the context of ETS, the diffusion of non-fossil technologies in regions that act as sellers performs much better than this diffusion in the buyer regions. [ABSTRACT FROM AUTHOR]

The emissions trading scheme has recently become an important emissions reduction mechanism in China. The initial quota allocation is one of the key points in its design, which includes the initial quota allocation criterion and allocation method. In this paper, we analyze the regional macroeconomic impacts of emissions trading in China under different quota allocation criteria and allocation methods using a multiregional computable general equilibrium (CGE) model. The results show that the Ability-to-Pay criterion is better than the other criteria, as it can lead to fewer macroeconomic costs and welfare losses; narrow the economic gap between the eastern, central and western regions; and guide investment into the western regions. Comparing free allocation and auction, it is determined that free allocation leads to lower macroeconomic costs, while auction is better at adjusting the industrial structure. This indicates that a hybrid allocation method is preferable. [ABSTRACT FROM AUTHOR]

We estimate the relationship between electricity, fuel and carbon prices in Germany, France, the Netherlands, the Nord Pool market and Spain, using one-year futures for base and peakload prices for the years 2008-2011, corresponding to physical settlement during the second market phase of the EU ETS. We employ a series of estimation methods that allow for an increasing interaction between electricity and input prices on the one hand, and between electricity markets on the other. The results vary by country due to different generation portfolios. Overall, we find that (a) carbon costs are passed through fully in most countries; (b) under some model specifications, cost pass-through is higher during peakload than during baseload for France, Germany and the Netherlands; and (c) the results are sensitive to the degree of cross-commodity and cross-market interaction allowed. [ABSTRACT FROM AUTHOR]

The proliferation of markets and market-based policy instruments in environmental governance is premised on the establishment of metrological regimes and the practices of measurement, commensuration, and commodification that underlie these regimes. This paper develops the concept of metrology and examines its role in the function and dysfunction of emissions trading markets. The concept invites us to question the social, political, and scientific conditions under which agreements about measurement and commensuration do or do not occur, and the consequences or effects of particular metrological systems. The paper provides three examples of how measurement, commensuration, and commodification have framed the design and function of emissions markets in order to illustrate the effects of particular metrologies on market rule. Contrary to claims that measurement serves as a means to ‘cool’ political disputes, this paper argues that because markets inevitably have distributional effects, the metrological systems which frame market design are frequently a site of focused political contestation. Seeing measurement and commensuration as inherently political can also provide insight into ongoing disagreements about the appropriate metrics and responsibilities for mitigating climate change and the form and function of markets more generally. [ABSTRACT FROM AUTHOR]

We analyze the effect of various combinations of state and national emissions policies on national emissions of a global pollutant, specifically, greenhouse gas emissions. We highlight the effect of unintended increases in out-of-state emissions on the efficacy of overlapping state policies. We show that emission taxes do not necessarily prevent a completely offsetting increase in out-of-state emissions when states add a state-level emissions tax to the national emissions tax. In particular, states small relative to their market will be unable to reduce national emissions with a state-level CO2 tax or a system of tradable permits. However, under a national cap-and-trade regime that allows states to be carved out, a state of any size can reduce national emissions by setting a tighter state cap. This combination yields a lower total cost than the equivalent combination of national and state CO2 taxes (if one exists) but increases the cost to consumers outside the market. [ABSTRACT FROM AUTHOR]

Renewable fuel standards, low carbon fuel standards, and ethanol subsidies are popular policies to incentivize ethanol production and reduce emissions from transportation. Compared to carbon trading, these policies lead to large shifts in agricultural activity and unexpected social costs. We simulate the 2022 Federal Renewable Fuel Standard (RFS) and find that energy crop production increases by 39 million acres. Land-use costs from erosion and habitat loss are between $277 and $693 million. A low carbon fuel standard (LCFS) and ethanol subsidies have similar effects while costs under an equivalent cap and trade (CAT) system are essentially zero. In addition, the alternatives to CAT magnify errors in assigning emissions rates to fuels and can over or under-incentivize innovation. These results highlight the potential negative effects of the RFS, LCFS and subsidies, effects that would be less severe under a CAT policy. [ABSTRACT FROM AUTHOR]

We investigate the economic factors that drive electricity risk premia in the European emissions constrained economy. Our analysis is undertaken for monthly baseload electricity futures for delivery in the Nordic, French and British power markets. We find that electricity risk premia are significantly related to the volatility of electricity spot prices, demand and revenues, and the price volatility of the carbon dioxide (CO2) futures traded under the EU Emissions Trading Scheme (EU ETS). This finding has significant implications for the pricing of electricity futures since it highlights for the first time the role of carbon market uncertainties as a main determinant of the relationship between spot and futures electricity prices in Europe. Our results also suggest that for the electricity markets under scrutiny futures prices are determined rationally by risk-averse economic agents. [ABSTRACT FROM AUTHOR]

This article contains an abstract of Dr. Sanjay Patnaik’s dissertation as well as a commentary essay on the research process in the appendix. In his dissertation, Dr. Patnaik examines the importance of the non-market environment for firm strategy and performance within the context of newly introduced regulations for greenhouse gases in Europe. The dissertation abstract contains a description of each dissertation chapter, including research questions, methodologies, and results. The commentary essay describes the author’s perspective on conducting research as an emerging scholar. [ABSTRACT FROM PUBLISHER]

Polanyi's concept of the 'double movement' is frequently interpreted as the opposition between the problematic and unsustainable dynamics of the market and the benign and normatively desirable reaction against this by 'society'. This paper questions this dualistic interpretation of the double movement and undertakes a problematization of the Polanyian idea of social and environmental protection. It does this by revisiting the concept of the double movement in light of the recent proliferation of market-based mechanisms for environmental regulation. Through an exploration of the different interpretations of Polanyi's work, the paper presents a dialectical reading of the double movement that conceptualizes the idea of social protection within a broader capitalist framework. This is then illustrated with the case of emissions trading as a particular form of environmental protection. Carbon trading as a mitigation strategy, it is argued, corresponds to the Polanyian idea of 'social protection' in that its protective potential to reduce emissions is itself constrained by the socioeconomic framework within which it operates. This in turn points to the need for a critique of climate mitigation efforts that goes beyond a focus on current problems with emissions trading schemes. [ABSTRACT FROM AUTHOR]

The impact and efficacy of a cap-and-trade regulation on the electric power industry depend on interactions of demand elasticity, transmission network, market structure, and strategic behavior of generation firms. This paper develops an equilibrium model of an oligopoly electricity market in conjunction with a Cap-and-Trade emissions permits market to study such interactions. The concept of conjectural variations is proposed to account for imperfect competition in the permits market. We demonstrate the model using a WECC 225-bus system with a detailed representation of the California market. In particular, we examine the extent to which permit trading strategies affect the market outcome. We find that a firm with more efficient technologies can employ strategic withholding of permits, which allows for its increase in output share in the electricity market at the expense of other less efficient firms. [ABSTRACT FROM AUTHOR]

Seven regions in China are currently conducting trial greenhouse gas emission trading pilot programmes in preparation for the development by 2015 of a nationwide cap and trade programme mandated by the 12th Five-Year Plan. Whilst China's carbon emission trading pilots are relatively recent, China possesses over fifteen years of experience in sulphur dioxide (SO2) emissions trading. Like the current carbon emission pilots, various SO2 pilots were conducted covering nine cities and four provinces before adoption of a national SO2 emissions trading programme. This paper considers how China's nascent greenhouse gas cap and trade programme may evolve and what policymakers can learn from China's own extensive domestic experience with SO2 emissions trading, which remains largely unexplored in the literature on China's carbon markets. [ABSTRACT FROM AUTHOR]

China's carbon emissions trading pilot schemes have already made significant progress, with five out of the seven pilot systems having started operation by the end of 2013. The experience in establishing and operating the pilot schemes will be valuable to the establishment of China's unified national emissions trading system in the near future. Design features of the five pilots are analyzed and compared, based on officially published documents. Aspects discussed include the establishment of the emissions cap, sector coverage, allowance allocation, data basis, compliance rules, monitoring/reporting/verification (MRV) mechanism, market intervention, offset mechanism, stakeholder consultations and legal basis. These systems are somewhat similar in cap setting, MRV mechanism and offset mechanism, but quite different in allocation approaches and market intervention. The schemes differ as well from existing international schemes as for example the European Emission Trading Scheme (EU ETS). Reasons for the different designs are briefly analyzed in a comparative manner. [ABSTRACT FROM AUTHOR]

The European Union has set a system of climate and energy targets comprising target values for greenhouse gas emissions (GHG), Emission Trading Sectors ETS and non-ETS sectors, energy efficiency and renewable energies until 2020. A new framework up to 2030 is just being developed. We analyse what lessons can be learned from the EU 2020 target system and how a new 2030 framework could be designed coherently. We derive a coherent target system for 2030 from a bottom-up assessment of energy efficiency potentials. Thus we show that ambitious energy efficiency and renewable energy targets also guarantee significant reductions in greenhouse gas emissions of 47-60% compared to 1990. ETS sectors can contribute significantly to the GHG reduction, provided that a stabilisation of the carbon price can be reached. An alternative design with a 40% GHG emission reduction as the only headline target, as currently debated, will not exploit all cost-effective energy saving potentials and so not take advantage of the macroeconomic co-benefits of energy efficiency either. [ABSTRACT FROM AUTHOR]

Emissions trading promises the achievement of a pre-defined environmental outcome at least cost. If the system works and key assumptions hold, it would seem to be an "optimal" climate policy instrument. On closer inspection, however, it is less clear what constitutes an "optimal" climate policy. This paper argues that optimality involves a range of criteria beyond short-term economic efficiency, but also has to consider the longer-term dynamic efficiency, as well as the political, administrative and legal feasibility of policy instruments. The assessment of optimality is confounded by the fact that climate policy relies on a number of policy instruments. This paper argues that a policy analysis should look at the performance of the entire instrument mix, and not analyse individual instruments in isolation. Such a mix will differ from country to country - depending on political preferences, administrative capacities, or regulatory traditions. The mix is also evolving: as climate policy aims to transform entire economies, the impact of individual policy instruments in the climate policy mix grows - measured by the share of the relevant markets that they affect, the incentives they provide, or the costs they impose. As this impact grows, there is increasing interaction between policy instruments. Understanding and managing these interactions therefore becomes key for successful climate policy. Emissions trading has a particular position in this instrument mix: it directly targets the end result, i.e. emissions from the regulated sectors, inputs to the process, technologies used, or the infrastructure, where other instruments target the interim stages in the process. At the same time, emissions trading also builds on other policies, for instance through administrative and regulatory infrastructures. This paper discusses how the other policy instruments affect the functioning of an emissions trading scheme (ETS), and how this will reflect on the performance of an ETS in terms of optimality. [ABSTRACT FROM AUTHOR]