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This study incorporates fairness concern in a low-carbon supply chain coordination mechanism where a single manufacturer sells its product to consumers through a single retailer. We develop four different scenarios of the Stackelberg master-slave game utility model—both members are neutral (NN), the manufacturer (FN) or retailer (NF) has fairness concern, and both are not neutral (FF), where the Nash bargaining fairness reference is leveraged to capture the impact of fairness preference on low-carbon supply chain optimisation decision-making profits, level of carbon emission reduction, warranty period, and revenue-sharing. Finally, numerical studies are conducted to quantify the impact of the Nash bargaining fairness concern. Research shows that: (1) fairness concern made it worse for the retailer but beneficial for the manufacturer and the system. (2) fairness concern causes a reduction in the level of carbon emission reduction and warranty period. However, the reduction of carbon emission reduction trading price and a certain range of revenue sharing effectively reduces the impact of fairness concern on members. (3) The revenue-sharing contract effectively reduces the negative impacts of fairness concern on supply chain members. The paper is a guide for enterprises development and cooperation but also provides empirical evidence for the government. [ABSTRACT FROM AUTHOR]

Considering that the manufacturer produces normal products (NPs) and low-carbon remanufactured products (LCRPs), this paper studied the production decisions under capital constraints and the Carbon Emission Permits Repurchase Strategy (CEPRS). The direct selling model and supply chain model are constructed respectively and optimal decisions are given. On this basis, the influences of CEPRS on optimal decisions and corporate performance are analyzed. This study shows that for the capital-constrained manufacturer, adopting the CEPRS is conducive to promoting the production of LCRPs. In the direct selling model, a higher end-of-period carbon price is not always beneficial for the environment. In the supply chain model, as the end-of-period carbon price increases, the low-cap manufacturer tends to lower the wholesale price of LCRPs, while the high-cap manufacturer tends to increase the wholesale price of NPs. A lower carbon cap is more effective in controlling carbon emissions, while a higher carbon cap generates a higher profit. Moreover, the manufacturer's preference for operation mode is affected by the carbon cap. Specifically, the low-cap manufacturer prefers the direct selling model, while the high-cap manufacturer prefers the supply chain model. [ABSTRACT FROM AUTHOR]

Strengthening carbon regulations and competitive pressures are forcing supply chains to provide environmental (e-) products to replace traditional (t-) products. However, cap-and-trade policy allows manufacturers, the main carbon emission emitters, to trade their emission permits freely. Considering manufacturers' power and key role in producing and carbon trading, we develop a duopoly model consisting of two competing manufacturers. Despite asymmetrical carbon emission reduction efficiencies, the two manufacturers can independently and simultaneously decide their respective t-/e-products outputs, emission reduction levels, and permits trade quotas. The unique Nash equilibrium is derived with the overall cap. We find that the low-cost manufacturer uses its cost advantage to invest more in emission reduction, then sells the excess emission permits to its rival, but makes its rival more competitive in product market. Interestingly, our results show that cap-and-trade policy triggers an industry collusion in which manufacturers reduce competition and improve the power and profits by reducing overall output and adopting differentiated product strategy. Furthermore, the cost advantage and high product substitution can accelerate low-cost manufacturer's transformation but hinder high-cost manufacturers. The impacts of cap-and-trade policy on consumer surplus and social welfare are also discussed to provide guidance for policy makers. [ABSTRACT FROM AUTHOR]

Much attention has been devoted to the economic benefits of emission trading systems (ETSs), but research concerning the SO2 ETS in China is scarce. We examine China's SO2 ETS in 2007 from the perspective of industrial sub-sectors and employ the difference-in-difference-in-difference (DDD) model to test whether the SO2 ETS can promote industrial total factor productivity (TFP). We identify whether it is the average effect or the dynamic effect of the SO2 ETS that can improve industrial TFP. The heterogeneity test results indicate that this policy has diverse influence in different regions and industries, and the effect is better in pollution-intensive industries. We also find that the policy enhances industrial TFP by promoting efficient technological innovation and capital allocation. Our findings provide evidence that supports the Porter Hypothesis and a guide for the industrialization of developing countries. Chinese policymakers should strengthen environmental enforcement, set quotas accordingly, and encourage technological innovation to improve industrial TFP. [ABSTRACT FROM AUTHOR]

Drawing from the big data archive of Google Trends, we innovatively construct a novel data set, the composite news-based speculation index, to proxy for the role of speculation in the predictability of carbon prices. We employ a theory-based multi-factor predictive framework to test the hypothesis that both emission compliance and emission noncompliance dynamics of the ETS matter in the predictability of carbon prices. We show that speculation is a good predictor of carbon prices. We find the robustness of the forecasting power of speculation in the predictability of carbon prices evident for both in-sample and out-of-sample forecasts and across different forecast horizons. [ABSTRACT FROM AUTHOR]

High-quality green innovation plays a significant strategic support role in high-quality economic developments. Drawing upon institutional theory and property rights theory, this paper investigates the drivers of green innovation quality (GIQ) from the perspectives of formal and informal institutions. Emissions Trading Schemes (ETS) represent formal institutions designed and implemented by governments, while Corporate Social Responsibility (CSR) represents informal institutions. The study finds that ETS significantly enhances GIQ. Moreover, CSR significantly and positively moderated the relationship between ETS and GIQ, indicating that the synergistic interaction between formal and informal institutions stimulates superior innovation quality. This paper contributes to the understanding of the relationship among government regulations, corporate ethics and responsibility, and innovation quality. This paper offers recommendations for environmental policy and management strategies. [ABSTRACT FROM AUTHOR]

EU recently decided to include shipping, meaning all intra-European shipping and 50% of extra-European voyages, in the EU Emissions Trading System (ETS) beginning in 2024. This article provides an early assessment of the impacts of the EU ETS on the shipping sector's potential reductions in greenhouse gas emissions for different types of ships. It further examines selected mitigation measures and the impact on modals split and costs. The study employs a mixed-methods approach combining quantitative estimates (based on data from the EU monitoring, reporting and verification system) with qualitative data and information from interviews with key actors and from previous literature. This approach aims to provide a comprehensive understanding of the impacts of the EU ETS. The inclusion of shipping in the EU ETS is expected to introduce significant incentives to reduce emissions. We estimate that switching to bio-methanol at an emissions allowance price of €90–100/tCO2 will be cost-effective for a minor share of shipping segments (representing about 0.5-5% of all ships), whereas at a price above €150/tCO2 it could be cost-effective for a considerable share (potentially 75%) of ships. In the short term, the costs incurred by the EU ETS will be passed on to transport customers as a surcharge. The increased cost may, unless properly addressed, drive carbon leakage. Meanwhile, a modal shift away from shipping may occur in the roll-on, roll-off (RoRo) and roll-on passenger (RoPax) segments due to direct competition with road and rail transport and the relative ease of shifting to other modes of transport. Integrating shipping into the EU ETS is an important step towards reducing GHG emissions in the sector but also will reduce emissions of NOX, SOX, and PM. CO2 emissions from shipping constitute about 8% of GHG emissions from all sectors in the EU ETS. The need to purchase allowances will increase operating costs, which will initially be passed on to transport customers as a surcharge. Interviews confirm that a modal shift away from shipping to road and rail may occur in the RoRo and RoPax segments. Switching to bio-methanol may be cost-effective mainly for some ships in the RoRo, RoPax and reefer segments at an allowance price below €100/tCO2, while for most ships (about 85–100% of ships) it will be cost-effective above €200/tCO2. [ABSTRACT FROM AUTHOR]

This paper constructs a unique dataset of clean energy and collects firm-level green innovation data that matches it with provinces and cities. Then, this paper executes quasi-natural experiments on green innovation to examine the effects of China's emission trading policy on green innovation. Further, this paper introduces the interactive terms of the pilot time and pilot area dummy variables into the spatial Durbin model (SDM) and spatial dynamic panel model (SDPM) to construct quasi-natural experiments to examine the spatial effect. The findings confirm a negative association between the 'policy treatment effect' and green innovation. The results also indicate a significant negative association between the emissions trading policy and clean energy. Besides, the empirical results reveal a positive correlation between clean energy and green innovation; clean energy promotes green innovation in the region and the surrounding areas. This paper complements existing research and provides empirical evidence and policy implications for developing clean energy, promoting green innovation, and improving the emission trading policy. [ABSTRACT FROM AUTHOR]

This study investigates the causal relationship between technology innovation and carbon emissions based on data from firms participating in the Korean Emission Trading Scheme (KETS). It is considered that the dynamics of firm innovation and environmental performance vary by industry group because each industry utilizes a different production process and carbon reduction ability. Therefore, in this study, the causal relationships between innovation and emissions are analyzed and compared by industry based on the panel vector error correction model (VECM) and the fully modified OLS procedures (FMOLS). The results show that innovation activities play an important role in promoting the environmental performance of firms at the 5% significance level in the long -run. On the other hand, a firm's sales that represent production activities increase carbon emissions both in the long and short-run. Comparative analysis between industries confirms that the dynamics vary by industry. R&D investments have a significant effect on carbon emissions reduction in the energy industry in the short run, but in the high technology industries such as semiconductors and electronics, environmental regulation plays an important role in inducing technological progress in the short run. [ABSTRACT FROM AUTHOR]

Carbon pricing is a key component of current climate policy agendas. There are a variety of societal and health impacts from carbon pricing interventions (e.g. from improved air quality). A better understanding of potential health impacts and how they depend on context and policy design is crucial to improve the political feasibility and fairness of carbon pricing. Recent reviews have synthesized evidence on the effectiveness, equity and perceptions of carbon pricing and on the health co-benefits of mitigation. This review provides a narrative structured synthesis of the health impacts of carbon pricing. We identified 58 relevant publications of which all were modelling studies. We classify review findings into policy-relevant categories, synthesizing information on how carbon pricing affects health outcomes when implemented in different contexts, in isolation or as part of policy mixes. Findings suggest that internalization of health co-benefits in optimal price level estimates could lead to substantial mitigation in some regions. There are also opportunities to design carbon pricing to improve health outcomes, including through progressive or targeted use of revenues to improve food security, subsidize healthier diets or promote active transportation. Revenue use, price differentiation, market size and permit allocation of emissions trading schemes (ETS), and interaction with other public health or mitigation policies all influence health outcomes. Overall, the health impacts of carbon pricing are highly context-specific and further evidence is needed, particularly on health inequalities and ex-post analysis. However, existing evidence suggests that it is possible to design health-beneficial carbon pricing policies, thus enhancing policy acceptability and feasibility. Key policy insights: Internalizing health co-benefits into optimal carbon pricing estimates could lead to substantial emission reductions in some regions, although additional action is needed to encourage price levels compatible with climate targets Health co-benefits can be boosted through key elements of policy design including price differentiation across commodities and regions, revenue use or ETS design Careful policy design can enhance health gains at a small or insignificant cost in terms of climate mitigation effectiveness and efficiency. The implementation of carbon pricing as part of broader policy mixes with a strong focus on progressivity and equity is crucial to achieving health co-benefits [ABSTRACT FROM AUTHOR]

This article offers insights into how leadership can be provided to advance the EU policy-making process through a case study of the policy-making for the new EU emissions trading system for buildings, road transport and additional sectors (ETS-2). Conceptually, it contributes to the literature on leadership in the EU by developing a three-part framework for observing leadership in EU policy-making, focussing on the intentions of an actor, the effects of the actions of an actor and the perceptions of other actors. The article also contributes to the literature on interactions between leaders in EU policy-making. Empirically, we provide a process tracing analysis of leadership in the policy-making process for the ETS-2. Using our framework, we examine five key leadership moments, showing how Denmark provided cognitive leadership, Germany provided exemplary and structural leadership, and the Commission and rotating Presidencies provided cognitive and entrepreneurial leadership. Our empirical analysis shows that various types of leadership were partially simultaneously and partially consecutively provided, with some leaders following up on the leadership strategies of others. We term this dynamic ‘sequential leadership’. Our finding confirms the importance of seeing leadership as a relationship, not just between leaders and followers, but also amongst leaders. [ABSTRACT FROM AUTHOR]

Amongst the most devastating extreme weather events in recent years, the 2022 Pakistan floods ostensibly triggered a new-found urgency to reduce emissions and redress other underlying causes of human-induced global warming. Yet multinational corporations and Western governments remain non-committal about shifting away from non-renewable energy, offering meaningful climate and debt financing, or substantively reducing emissions. Meanwhile, the modalities of capital accumulation in postcolonial contexts such as Pakistan are destroying already vulnerable ecosystems, even as they reinforce logics of expropriation and uneven development inherited from colonial times. As Pakistan experiences a demographic explosion and mainstream politics becomes increasingly reactionary, the imperative of posing an alternative hegemonic conception to the dominant development paradigm is ever more acute. This Commentary interrogates the meaning of climate justice so as to bring the global political economy into conversation with the demographic, environmental, and economic trends in the post-colony, with a specific focus on the 2022 floods in Pakistan. It is contended that the Pakistan case can be broadly extrapolated to postcolonial South Asia and sub-Saharan Africa, regions that are home to the fastest growing young populations in the world, and also amongst the most vulnerable to climate change. [ABSTRACT FROM AUTHOR]

Emissions trading scheme (ETS) is a market-oriented measure to promote green transition. In order to determine systemic risk among ETS pilots and industrial supply chain in China, this study applies a financial network approach on a system consisting of 7 emission allowances and 27 commodities. The empirical findings confirm that ETS poses transition risks to industrial supply chain by creating new information channels between emission allowances and commodities. Such channels are generated by the extensive financial connections within the ETS-commodity system. The degree of financial connection dynamically responds to shocks from institutional events of ETS, transaction adjustments for commodities, and extreme risk event like COVID-19. Analysis of connection structure shows that most of the products within the ETS-commodity system differ in the ability to generate financial connections. The bidirectional connection feedbacks between them and their connectors exhibit asymmetry. Several centrality indicators also screen out systemically important products from multiple scales. The findings could have policy implications for related authorities, manufacturers and investors. [ABSTRACT FROM AUTHOR]

This study investigates the impact of financial development and foreign direct investment (FDI) on CO2 emissions, with a special focus on carbon pricing (emissions trading and taxing) in 57 developed and developing economies between 2000 and 2017. Using an eight-fold financial development construct for the first time, we find that financial depth in institutions negatively (positively) affects the CO2 intensity of developed (developing) economies, while financial access to institutions has a negative impact in both types of economies. Financial depth (stability) in markets negatively affects developing (developed) economies' CO2 intensity, while financial access to markets increases (decreases) CO2 intensity in developed (developing) economies. Moreover, inward FDI stock quality (a net FDI position) increases (reduces) CO2 intensity in developing (developed) economies. Finally, we document that carbon pricing in developed economies helps reverse the positive effect of inward FDI quality on CO2 intensity, implying that a such policy helps those economies attract climate-friendly FDI. Our study reveals the implications of the reduction of CO2 emissions placing the focus on both financial development and FDI fully and together for the first time. [ABSTRACT FROM AUTHOR]

We highlight a coordination problem between the EU Emissions Trading System (ETS) and the EU's offshore renewable energy strategy. We exemplify this coordination failure by analyzing carbon leakage effects associated with Denmark's planned North Sea energy island. The Danish energy island project will not start production before 2033, implying a long interval between project announcement and production. Using a dynamic model of the EU ETS, we show that the large time gap between announcement and production likely results in a 'Green Paradox', where the energy island increases aggregate EU ETS emissions. The mechanism leading to the emission increase is complicated and works through the Market Stability Reserve (MSR). The estimated 2050 leakage rate is 145 percent in our main scenario and not below 100 percent in any alternative scenario. We discuss how to improve the climate benefits of the energy island or similar large-scale renewable energy projects. This includes possible revisions to the EU ETS and the role of Power-to-X technologies. There is a coordination failure between the EU ETS and the EU's offshore renewable energy strategy, as projects intended to fulfil the offshore strategy are likely to result in substantial carbon leakage due to the EU ETS. In ETS-covered sectors, there are averse leakage effects associated with emission abatement projects with significant time lags between project announcements and emission abatement like the Danish North Sea energy island. For the North Sea energy island and similar projects, leakage effects can be diminished through policies that mitigate the impact on EU ETS allowance demand. The coordination failure can be eliminated by removing MSR cancellations or the entire MSR mechanism while adjusting the emission cap to hold expected emissions constant. However, removing MSR cancellations amplifies leakage effects for abatement projects with short time lags between announcements and emission abatement, which currently have weak leakage effects due to MSR cancellations. [ABSTRACT FROM AUTHOR]

The statistical significance of the pollution haven hypothesis remains low. This suggests that some elements may have been overlooked in hypothesis testing. Here, pollution havens due to trade liberalization may depend on the degree of technological spillover. This spillover affects the industrial concentration of polluting firms. Using an agglomeration model with technological spillover, we analysed the effect of transport costs on pollution havens to clarify this relationship. Interactions between an international emission permit trading market and local spillover in innovation bring about the following multiple equilibria: the poverty trap equilibrium leads to similar results in the case of global spillover, where lower transport costs encourage economic growth in addition to relocation from the South to the North. By contrast, equilibrium with a higher concentration of firms leads to the pollution havens hypothesis because decreased transport costs prompt polluting firms to relocate to South with relatively small markets due to the home market effect, leading to lower economic growth. Our findings imply that the type of spillover in innovation (local or global) determines the pollution haven hypothesis. In a global economy, narrowing the North-South technology gap could contribute to eliminating pollution havens. [ABSTRACT FROM AUTHOR]

The effectiveness of carbon price in emissions trading schemes (ETS) is an important issue in China in the context of its ambitious climate change goals. This paper adopts a staggered difference-in-differences model to estimate whether China's ETS reduced CO2 emissions while maintaining economic growth even under low carbon prices. The results indicate that despite the low carbon prices, the ETS effectively reduced CO2 emissions without undermining the economy. Specifically, an increase of $1 in the carbon price reduced CO2 emissions by 1.69% and increased the per capita GDP by $286. The carbon price primarily achieved emission reduction and promoted economic development through channels, such as technological innovation, foreign direct investment, energy mix, and industrial structure. Carbon leakage to neighboring regions was not evident. Heterogeneity analysis showed that the environmental effects of the carbon price were more pronounced in regions with higher levels of economic development and CO2 emissions. Conversely, the economic effects of the carbon price were more pronounced in regions with lower levels of economic development and CO2 emissions. The carbon price achieved significant economic effects in regions that solely adopted the free allocation mode of emission allowances, while regions that used a combination of free allocation and auctioning experienced substantial emission reduction effects. Despite low carbon prices, China's ETS effectively reduced CO2 emissions without compromising economic growth. This finding provides new empirical evidence for the effectiveness of carbon price as well as decision support for the future promotion of ETS. Technological innovation, FDI, energy mix, and industrial structure are crucial channels through which the carbon price achieves emission reduction and promotes economic development. The absence of carbon leakage to neighboring regions suggests that ETS is an internally effective mechanism for emission control. Heterogeneity analysis showed that regional characteristics and allowance allocation modes can influence the effectiveness of carbon price, thus emphasizing the importance of targeted policy design and appropriate allocation methods. [ABSTRACT FROM AUTHOR]

According to most climate mitigation scenario assessments, limiting global warming to 1.5–2°C in the long run will not be possible without the extensive deployment of carbon dioxide removal (CDR) from the atmosphere. CDR is required for drawing down and achieving net-zero CO2 emissions by mid-century. Thereafter, CO2 removals will likely need to exceed residual CO2 emissions, resulting in net negative emissions. A policy framework based on 'carbon removal obligations' (CROs) has been proposed to respond to concerns about the financial and fiscal viability, the lack of incentives for CDR uptake, as well as the physical and technological risks associated with any climate mitigation scenario that relies on large scale CDR. Here we propose an updated and improved CRO policy framework, consisting of two core elements: the 'principal CRO mechanism' obliges emitters of a tonne of CO2 to remove a tonne of CO2 at the time of maturity of the CRO. On top of this obligation, CRO holders need to pay a fee for the temporary storage of CO2 in the atmosphere. This 'CRO pricing instrument' is used by regulators to steer the carbon emissions and removals pathways independently. Our update suggests that markets for CDR under the CRO framework should operate independently from markets for emission reductions. We propose a blueprint for legal implementation where CROs are integrated akin to private financial borrowing and debt mechanisms. By aligning CROs with established financial systems, we leverage familiar institutional roles, seamlessly integrating climate mitigation into the core economy. The proposal applies the polluter pays principle to the costs of carbon removal from the atmosphere, whilst providing legal guarantees that the removals will materialize. By placing climate change mitigation pricing levers in the hands of the traditional managers of financial stability, that is, central banks, better account is taken of the externality of carbon emissions as part of core economic and financial management, with the corollary that climate change mitigation response management is better integrated into the economic mainstream. Establishing a standard for the creation of removal units by CDR projects facilitates a more efficient market by reducing transaction costs and enhancing price discovery. Early action by government to put in place legislative measures indicating the direction of policy, and a timetable for introducing CROs, would enhance private sector confidence and engagement in the CDR project sector. [ABSTRACT FROM AUTHOR]

Transitioning to a low-carbon economy while promoting sustainable development requires behavioural changes and mobilization of significant investments. Key instruments being used for that include carbon pricing initiatives, such as carbon taxes and cap-and-trade policies, and, more recently, green bonds. Although the literature has provided some evidence on emission reduction associated with carbon pricing initiatives, there is a lack of investigations on the environmental performance of green bonds; and only theoretical models describe the potential benefits of combining both. Aiming to fill this gap, this study uses regression analysis and annual data for 150 countries between 1990 and 2019 to assess how carbon pricing initiatives and green bonds relate to carbon dioxide (CO2) emissions. This paper makes two main contributions. First, it examines how two climate instruments, carbon pricing and green bonds, relate to CO2 emissions. Previous research has focused only on individual instrument assessments and mainly on carbon pricing. Second, this paper empirically analyses whether there are interaction effects of the two instruments, an assessment not previously undertaken. The results suggest that the implementation of nationwide carbon pricing initiatives is associated with an 11% reduction in CO2 emissions on average. By comparison, green bond issuances are associated with an average 14% reduction in CO2 emissions. Further, no statistically significant interaction effects between carbon pricing initiatives and green bonds were observed. The results must be cautiously interpreted and cannot be attributed solely to the instruments studied since heterogeneous effects, biases from distinct sources, and the existence of complementary policies might influence the results. Carbon pricing initiatives, such as carbon taxes and cap-and-trade schemes, and green bonds are being used to promote the transition to a low-carbon economy. Investigation into green bonds and their impact on emissions is scarce and to date, only theoretical models analysed potential interaction effects of their combination with carbon pricing. The results show an average of 11% reduction in CO2 emissions associated with carbon pricing initiatives and of 14% reduction in CO2 emissions associated with green bonds issuances. While the results show promise in the emission reduction performance of these two instruments, caution in interpreting these results is advised as complementary policies, biases from distinct sources, and evidence of heterogeneous effects make it challenging to disentangle the effect of individual policies. [ABSTRACT FROM AUTHOR]

This paper addresses the effects of clients' carbon risk on audit pricing. Using data from 438 EU companies for the period 2013–2019, we find a positive relationship between carbon risk (measured by the level of carbon emissions) and audit fees. Furthermore, we find that participation in the European Union's Emission Trading System, a limited market and regulation scheme to mitigate special industries' Greenhouse Gas emissions, strengthens the positive relationship between carbon risk and audit fees. Insights from additional tests indicate that auditors price carbon risk particularly for large clients that are under greater public scrutiny and that the increase in fees rather stems from a risk premium charged by the auditor than higher audit effort. With interest in climate change developing rapidly across society, practice and research combined with the increasing importance of reducing carbon risk, our findings are timely and should thus appeal to a wide variety of recipients. [ABSTRACT FROM AUTHOR]

Eutrophication is a serious problem in many parts of the world, and aquaculture production can contribute to the problem as well as be part of its solution. Nutrient polices in developed countries are often command-and-control policies that may have contributed to the slow growth of the sector. We perform a literature review to investigate how current nutrient polices affect the sector and if economic incentive policies have greater potential to support sector growth. Although the literature is limited in many aspects, the results indicate that this may be the case. Given that the ability to measure, monitor and control has improved over time, possibilities for using economic incentive policies have increased. For example, subsidies that are results-based, i.e., based on the amount of emissions that are reduced, could be used. It is also possible for aquaculture production to benefit from being included in emissions trading systems, where these are available. [ABSTRACT FROM AUTHOR]

As part of its 'Fit for 55' package to realize a previously agreed upon 55% reduction in greenhouse gas emissions by 2030 (as compared to 1990 levels) along with a net-zero by 2050 target, the European Commission has proposed a Carbon Border Adjustment Mechanism (CBAM) that phases out free allowances by 2035. Although most initial commentary has focused on potential conflict with the EU's international trading partners from this renewed effort to price carbon while managing 'carbon leakage', policymakers may face greater challenges in their efforts to withdraw the highly visible benefit of free permits from domestic industry. This Perspective analyzes key policy dynamics relating to the imposition of burdens on powerful producer interests, and identifies where obstacles to policy change in the issue-area of carbon border adjustments (CBAs) are most likely to arise. Policy conflict over CBAM appears likely to follow unfamiliar geopolitical or sectoral lines. Internationally, several major trading partners have signaled a willingness to align their own emissions trading policies more closely with those of the EU and may even end up 'racing to the top' in harmonization efforts. Domestically, EU industries have expressed relatively undivided reservations about the CBAM proposal. Targeted domestic sectors will likely be privately assured that burdens are minimal, or compensated by new subsidies or side payments, despite potential violations of international trade law principles of non-discrimination and national treatment. Nonetheless, if CBAM simply disregards exporting countries' carbon prices, or effectively subsidizes domestic heavy industry by providing them with free allowances at the same time that importers are charged with the adjustment, then international conflict is more likely. [ABSTRACT FROM AUTHOR]

In this paper, the consequences of recognition of carbon emission allowances as financial instruments under the EU financial markets law including Directive 2014/65/EU of 15 May 2014 on markets in financial instruments (MiFID II) and the EU environmental law are analysed. We try to answer the question in what way the recognition of carbon emission allowances as financial instruments affected the functioning of the European Union Emission Trading Scheme (EU ETS). In particular, we ask whether it is beneficial or detrimental in terms of the environmental and economic effectiveness of the EU ETS. [ABSTRACT FROM AUTHOR]

Carbon market construction is a crucial tool in meeting sustainable development goals (SDGs). Based on data from prefecture-level cities in Fujian Province, China, between 2011 and 2020, the SBM model is employed to determine the carbon emission efficiency for each city. Additionally, the event analysis method is deployed to evaluate the influence of the carbon market construction on carbon emission efficiency in Fujian Province, and project carbon emission efficiencies for different scenarios. The findings reveal that: (1) The construction of the carbon market has led to an improvement in carbon emission efficiency in Fujian Province, the duration of this effect needs to be strengthened. (2) No significant difference has been observed in carbon emission efficiency between coastal and inland cities due to the carbon market construction. It is feasible to investigate the formation of a carbon market with distinct local features, ultimately achieving SDGs. [ABSTRACT FROM AUTHOR]

This research examines the market reaction to the publication of firm-specific environmental news for participating firms in the European Union's Emissions Trading System (EU ETS) during its third phase. Our sample of 123 publicly listed participating firms, located in 21 European countries, accounted for 45.43% of emissions in the EU ETS in 2020. Using an event study methodology during the period 2014–2021, we find that positive news was rewarded with increased returns for publication events related to the latter years of the phase (2017–2020) while it had an insignificant impact for earlier year (2013–2016). This indicates that the EU ETS is finally fulfilling its intended function of incentivising participating firms to reduce their emissions. Our study highlights the contextually contingent nature of the relationship between environmental and financial performance. [ABSTRACT FROM AUTHOR]

Several EU countries have targets for the reduction of CO2e emissions that go beyond the target set by the EU. We study what would be the optimal carbon tax policy in such EU frontrunner countries, focusing on two questions: 1) How should national climate policy be coordinated with the European Emissions Trading System (ETS), and 2) How should an EU frontrunner country address the risk of carbon leakage? We show that these issues are closely linked and that the answers to the two questions depend on the following factors: i) The shadow cost assigned to carbon leakage, ii) The rates of carbon leakage in the ETS and non-ETS sectors, and iii) The price of ETS emission allowances relative to the domestic marginal abatement cost of attaining the desired reduction of domestic emissions. Our analysis shows that it is preferable for an EU frontrunner country to implement a national ETS sector carbon tax that results in a higher total carbon price in the national ETS sector compared to the national non-ETS sector. We illustrate how our theoretical model can be combined with a modified version of the GTAP-E general equilibrium model of the world economy to estimate the parameters of the optimal national carbon tax scheme in an EU frontrunner country, using Denmark as an example. We find that the ETS sector should pay a total carbon price that is between 33 and 78 percent above that of the rest of the economy depending on the aversion to carbon leakage. Key policy insights It is generally optimal for an EU frontrunner country – one with a domestic emission target beyond that set by the EU – to implement a national ETS sector tax. The total national carbon price should be higher in the ETS sector compared to the non-ETS sector. Data for Denmark indicate that the total national ETS sector carbon price should be at least 33 percent higher than that of the national non-ETS sector. [ABSTRACT FROM AUTHOR]

This research develops an optimization model of supplier selection and order allocation with transportation mode alternatives under carbon cap and trade policy. The objective function of the model is to maximize the manufacturer's total profit. Total revenue comes from the selling of both good items and imperfect items. Total cost in this research consists of purchase cost, transportation costs from supplier to manufacturer and from manufacturer to retailer, transaction cost, holding cost, inspection cost and carbon emission cost. Transaction cost is applied for each selected supplier in each period without considering the type and quantity of the item. This research considers a supply chain with multiproducts, multiperiods, multisuppliers and multiretailers. We assumed that the manufacturer inspects all the products come from the suppliers and some of the products are defective. Those defect items are sold in a lower price at a secondary market. This research has a contribution in the inclusions of carbon emission and defect product in the model. Hence, the model is in line with the sustainability issue and closer to the real condition in terms of imperfect manufacturing. A mixed integer linier programming (MILP) model is developed in this research, and the model was solved using Lingo 15.0 software with branch and bound method. The result of sensitivity analysis shows that the objective function is sensitive to the changes of demand, selling price of good item, transportation cost, purchasing cost and holding cost. While the decision variables of order allocation and the number of transportation mode are sensitive to the changes of demand, transportation cost and purchasing cost. [ABSTRACT FROM AUTHOR]

This article proposes a two-stage stochastic profit-maximizing hub location problem (HLP) with uncertain demand. Additionally, the model incorporates several carbon regulations, such as carbon tax policy (CTP), carbon cap-and-trade policy (CCTP), carbon cap policy (CCP), and carbon offset policy (COP). In the proposed models, an enhanced sample average approximation (ESAA) method was used to obtain a suitable number of scenarios. To cluster similar samples, k-means clustering and self-organizing map (SOM) clustering algorithms were embedded in the ESAA. The L-shaped algorithm was employed to solve the model inside the ESAA method more efficiently. The proposed models were analyzed using the well-known Australian Post (AP) data set. Computational experiments showed that all of the carbon regulations could reduce overall carbon emissions. Among carbon policies, CCTP could achieve better economic results for the transportation sector. The results also demonstrated that the SOM clustering algorithm within the ESAA method was superior to both k-means inside ESAA and classical SAA algorithms according to the %gap and standard deviation measures. In addition, the results showed that the L-shaped algorithm performed better than the commercial solver in large-scale instances. [ABSTRACT FROM AUTHOR]

Closed-loop supply chain is an important path to realize the sustainable development of supply chain, and cap-and-trade and carbon tax policies further promote closed-loop supply chain to invest in low-carbon technologies. This paper combines Economic Production Quantity with Economic Order Quantity models and designs multiple carbon policies. Abatement rate and collection rate are the key variables used to explore the mechanism of the interaction between carbon tax and cap-and-trade, inventory dynamics of closed-loop supply chain and impact of multiple carbon policies on closed-loop supply chain. Construct and analyze benchmark model, investment model under multiple carbon policies, remanufacturing model under multiple carbon policies and mixed strategies model under multiple carbon policies, and the results show that there is a non-linear complementary relationship between carbon price and carbon tax, and both remanufacturing and low-carbon investment can optimize cost and carbon emissions when carbon price is distributed at a certain interval. Furthermore, mixed strategies combining remanufacturing and low-carbon investment can optimize cost and carbon emissions simultaneously. The main contribution of this paper is to build a low-carbon circular system, which can help balance cost and carbon emissions of closed-loop supply chain. [ABSTRACT FROM AUTHOR]

The impact of trade openness on environment is of increasing concern to environmental practitioners, industrialists, and researchers. Unlike previous studies that only focus on the impact of trade openness on carbon dioxide (CO2) emissions, this study explores the relationship between trade openness and carbon productivity. To this end, we construct a dynamic nonlinear panel model using a panel sample of 76 countries for the period 1990–2021. Furthermore, we conduct a mediation effect analysis to examine the underlying impact mechanisms between trade openness and carbon productivity. Finally, by dividing the total sample into four subsamples, we analyse possible regional heterogeneity in trade openness and carbon productivity relationship. The empirical results show that: (1) Trade openness has a significant impact on carbon productivity, with a U-shaped relationship between the two variables. In other words, carbon productivity first declines and then rises after a certain threshold level of trade openness is reached. (2) Energy intensity and energy consumption structure are two important mediators between trade openness and carbon productivity. (3) The impact of trade openness on carbon productivity is heterogeneous across countries. Based on the main findings, we propose several policy implications to improve trade quality as well as global carbon productivity. [ABSTRACT FROM AUTHOR]

To achieve the goal of carbon reduction, China has been piloting the Carbon Emission Trading System (CETS) since 2013. As the economy faces a downward trend, it is significant to explore the impact of CETS on business development. There is still debate in academia about whether this policy can boost the level of business development. This paper, based on all A-share data of listed companies in China from 2009 to 2018, uses the Difference in Differences (DID) model to verify the impact of CETS on the input of capital and labor factors and the level of technology in enterprises and discusses the industry heterogeneity of this impact in detail. Placebo tests, propensity score matching, and triple differences ensure the robustness of the conclusions. In further research, this paper decomposes the policy effect of CETS. It regresses the impact of carbon quota prices and carbon market trading scale on business development. The final conclusion is that CETS has a positive impact on the input of capital and labor in enterprises and a negative impact on the level of technology. After distinguishing industries, this conclusion shows differences according to different characteristics of high emissions and low emissions. In addition, the increase in carbon quota prices hinders business development, while the scale of carbon market trading shows an inverted "U" relationship with business development. The article provides meaningful policy references for China and countries in the early stages of CETS construction. [ABSTRACT FROM AUTHOR]

The emissions trading scheme (ETS) has piqued substantial interest among economists and policymakers. China officially launched the electricity sector's national carbon emissions trading market in 2021, making it the world's largest compliance carbon market. In contrast to the cap-and-trade (C&T) system prevalent in other economies, China's national carbon market employs a rate-based mechanism that implicitly subsidizes the output of regulated entities; however, is it effective? This study uses a market-design theoretical framework to explore whether China's national carbon market functions effectively and, more critically, what leads to its (slight) underperformance. We discover that policy design, policy conflicts, policy uncertainty, inexperienced market regulation, and excessive or inappropriate government intervention are the primary constraints on this emerging market, resulting in shrinking market thickness, congested market transactions, and lack of safety. For China to establish a better national carbon market, stronger market-oriented rules, appropriate market regulation, improved policy coordination, and greater electricity market reforms are required. [ABSTRACT FROM AUTHOR]

China has restated its goal to achieve carbon neutrality before 2060, and the newly launched national emissions trading system (ETS) of 2021 is expected to play a leading role in achieving it. By examining the core design elements of the ETS, this study analyses the legal impediments that may prevent the ETS from achieving China's climate goal. These challenges largely result from a regulatory framework that lacks concrete provisions and effective mechanisms to reduce emissions. By doing so, this study aims to shed some light on potential improvements in ETS regulation, and the role judicial procedure could play in justifying the behaviours of the ETS participants. [ABSTRACT FROM AUTHOR]

The European Union Allowance (EUA)-driven carbon emissions trading market is selected as a research object. First, the one-component and two-component Beta-Skew-t-EGARCH models are used to depict the characteristics of the return series, considering return series features such as volatility clustering and asymmetry. Moreover, the extreme VaR risk value is directly estimated. Then, the POT method of extreme value theory is applied to describe the extreme tail characteristics of the return series, and the one-component and two-component Beta-Skew-t-EGARCH-POT models constructed, to estimate the extreme VaR risk value, once again. Finally, the performance of each model in extreme VaR risk measurement is tested using six indicators that include the relative error rate, independence test, and dynamic quantile test. The empirical results show that the two-component Beta-Skew-t-EGARCH-POT model performs better in extreme risk measurement, inferring that this model is better suited to describing risk in the carbon market. [ABSTRACT FROM AUTHOR]

Cap-and-trade systems, or emission trading systems (ETS), are increasingly adopted by countries and regions to provide economic incentives for reducing greenhouse gas emissions. The majority of existing ETS are early-stage systems implemented in and after 2013. These early-stage ETS are typically characterised by a focus on few industry sectors, and the employment of free emission allocation schemes including grandfathering and benchmarking. In this paper, we investigate the impact of emission allocation schemes in an early-stage cap-and-trade system in a duopoly market. We show that benchmarking scheme may lead the energy-efficient firm to reserve part of its emission permits, while firms always use up their after-trading permits under grandfathering. We also find that a more stringent emission cap may increase firms' profits rather than decreasing them under both allocation schemes, suggesting a possible cause for windfall profits observed in early-stage ETS. Benchmarking is found to lead to lower emissions compared to those under grandfathering, while it may result in higher or lower firm profits, consumer surplus, and the overall social welfare. Furthermore, under either allocation scheme, allowing emission trading does not affect the total emissions, while it can increase firm profits and consumer surplus and therefore the overall social welfare. [ABSTRACT FROM AUTHOR]

Recycling plastic can abate the environmental pollution as well as CO2 emissions by saving the carbon-intensive feedstock input. The uncertain carbon price places significant effects on the establishment and operation of the whole supply chain. This study develops a green supply chain model combined with geographic information system (GIS) to account for carbon price uncertainty and evaluate its effects on the closed-loop supply chain (CLSC) of plastic recycling. A two-stage stochastic programming model is constructed, in which the stochastic variable, CO2 price is modelled as a geometric Brownian motion process. Six scenarios are designed with respect to price expectation and volatility. A case study is performed with the GIS information of the plastic supply chain in Zhejiang province, China. The results illustrate that triggering the establishment of reverse logistics requires a carbon price threshold significantly beyond the current level. Lower price volatility would facilitate the decision-making of investment into the reverse logistics. Mechanisms to alleviate the market variation shall be introduced. A sound market condition is desired to obtain the optimal balance that encourages the CLSC without creating extra pressure on the firms. The proposed modelling framework can be easily applied to other sectors with similar characteristics. [ABSTRACT FROM AUTHOR]

The liberalization of economies is aimed at boosting domestic growth through foreign investment and trade. The proponents of liberalization argue that opening up markets in developing economies provides access to capital to enhance production. However, proponents of the pollution haven hypothesis (PHH) argue that liberalization and trade agreements have led to the export of carbon-intensive production from wealthier countries to developing economies. The difference between the two outcomes lies in the nature of fixed assets built by developing countries. In this study, we examine the role of fixed capital formation on carbon emissions during two distinct periods of India's economic development. India liberalized its economy with trade reforms in 1991, thereby providing two distinct time periods of closed and open trade policies. The economic data during 1971–2021 is divided into two parts—before (1971–1990) and after (1991–2021) liberalization. Gross fixed capital formation (GFCF) is used as a measure of capital formation while carbon emissions are used to represent environmental impact. Auto-regressive distributed lag (ARDL) model is used for analysis. Results indicate that GFCF had no significant relationship with carbon emission before liberalization, whereas, there was a significant, positive impact post-liberalization. The study is of significance to policymakers in developing countries as it suggests a change in the capital formation towards low carbon-intensive products and services. It also strengthens the argument for investing capital in cleaner energy and technologies. [ABSTRACT FROM AUTHOR]

Notes 1 C&T is termed a I mass-based i ETS, since compliance depends on the given level of allowances supplied to the facility, while the TPS is regarded as a I rate-based i ETS, since compliance depends on keeping the ratio of emissions to output below a given benchmark. The development and implementation of China's ETS, the world's largest in terms of emissions covered, underscore the increasing global urgency for decisive action against climate change and the pivotal role market-based mechanisms like ETS can play in this collective endeavor. Most of the province-level ETSs in China, including the national ETS as discussed later, primarily utilize the TPS system for allowance allocation, often supplemented by C&T with updating. Basis of free allowance allocation and the corresponding type of ETS Outside of China, C&T remains the primary method for allowance allocation, either with or without updating. [Extracted from the article]

This study aims to investigate the nexus between European and emerging markets in terms of multiple-timescale conditional analysis of the carbon-energy relationship. The findings identified the price movements of fossil fuels, Granger-caused movements in the carbon price, and movements in the carbon price Granger-caused movements in the electricity price. Furthermore, it was determined that in the long term, the crude oil and gas markets may increase and the coal market may decrease their causal influence on the carbon market. Finally, the role of the carbon market in the conditional Granger-causal network was observed to weaken during Phase III of the European Union Emissions Trading Scheme. These findings imply asymmetric information spillover between the European and emerging markets, particularly in the long term. [ABSTRACT FROM AUTHOR]

Emissions trading schemes (ETS) area is a leading climate policy instrument worldwide and have been widely discussed and researched. However, few studies to date focus on the nexus of ETS and income inequality, an important socioeconomic phenomenon. To fill this gap, taking China as an example, this paper discusses the influence of ETS on income inequality and its dynamic changes using a time-varying differences-in-difference model combined with a propensity score matching approach. The results demonstrate that China's pilot ETS has contributed to reducing income inequality. Various robustness tests support this conclusion. Moreover, the strength of ETS's contribution to reduction in income inequality gradually increases over time. We further analyze the mediating effects of carbon intensity, energy consumption, industrial structure, and technological innovation. ETS reduces income inequality by reducing coal consumption. The regional heterogeneity analysis shows that, unlike in other regions, ETS has a positive impact on income inequality (i.e. it increases it) in the eastern region in China due to its optimized energy structure and relatively complete, open, and flexible economy system. The paper discusses the above findings and their policy implications. It is also designed to promote research on ETS and to diversify research perspectives of income inequality from both theoretical and practical aspects. Evidence from China's pilot experience with ETS shows that it contributes significantly to balancing income distribution and alleviating the increasingly acute social conflicts caused by income inequality. This provides new theoretical and decision support for the promotion of ETS in the future. The energy revolution driven by ETS promotes income redistribution, which is conducive to income equality. Governments should enforce the constraints of ETS on power generation companies; guide capital to invest more in the non-thermal power industry, especially the renewable energy power sectors; and guide and regulate the income distribution in new power sectors. Governments' revenue from ETS can and should be used to further redistribution of income and to reduce income inequality. A higher number of free quotas and a lower carbon price could be imposed on low-profit or labor-intensive industries to reduce their emission costs. [ABSTRACT FROM AUTHOR]

This article analyses the development of the mix of EU climate policy instruments and the level of climate policy integration (CPI) in the twenty-first century. Complementing established criteria of ambition and stringency, analysis of the instrument mix and CPI enables a fuller assessment of the transformational potential of EU climate governance. We argue that both have significantly advanced towards matching the 'super-wicked' nature of the climate challenge, although important gaps and challenges remain in addressing all relevant sectors, barriers and drivers. First, EU climate governance has 'thickened' through a stepwise layering of various economic, regulatory, procedural, and informational instruments. Second, this thickening has gone hand in hand with an expansion and strengthening of CPI. The European Green Deal promises to further complement the instrument mix and to universalise and prioritise CPI, but major initiatives remain to be proposed and realised for the Green Deal to propel the needed comprehensive transformation. [ABSTRACT FROM AUTHOR]

Thus far, attempts to link the emissions trading schemes (ETS) of countries with heterogenous climate policies have failed. Despite the adoption in Glasgow of a long-awaited rulebook for Article 6 of the Paris Agreement, heterogeneous linking remains politically challenging to achieve – but why is this? We explore this question, with a focus on Northeast Asia. We surveyed Chinese, Japanese and Korean experts involved in negotiating the Paris Agreement Article 6 Rulebook, to test how feasibility, confidence and willingness affect the specifics of linking in the region. Our results reveal differences in perceptions among countries and subcategories of agents involved in the policy process. We identify three different political barriers to linking in Northeast Asia: an institutional resistance barrier, predicated on administrative challenges; a governance-sharing barrier, which reflects the difficulties of resolving complex sovereignty questions; and an environmental integrity barrier, based on a lack of confidence between partners in the region. [ABSTRACT FROM AUTHOR]

China's newly launched national carbon emission trading market is attracting attention from all parties. Taking the corporate behavior as an entry point, this paper studies the impact of this carbon market on corporate risk-taking by constructing the difference-in-differences (DID) model. We find that the running of the national carbon market significantly increases participating companies' risk-taking. Meanwhile, this positive effect is more pronounced for state-owned enterprises and those with longer operating. Further research examines the moderating effects of the constraint and incentive channels. The results indicate that, when participating in the national carbon market, firms with lower financing constraints or stronger internal incentives are more willing to take risks. [ABSTRACT FROM AUTHOR]

In this study, a sustainable inventory model is devised to obtain the retailer's optimal pricing and replenishment policies for degrading items having a certain lifetime incorporating partial back order as a shortage and dynamic demand under two different scenarios (a) carbon cap and trade policy (b) carbon tax policy. The primary objective of this study is to maximize the retailer's annual total profit. The retailer's profit function has been optimized with the help of convexity/concavity criteria employing classical optimization techniques. Based on a real case study, two different numerical examples and corresponding optimal solutions have been shown for both models with the help of Lingo 17 software. Moreover, the impact of the major inventory parameters and prominent managerial insights are presented for the robustness of the proposed model that can cooperate with industrial managers/decision-makers for the overall improvement of his/her industry to take effective and qualitative decisions. [ABSTRACT FROM AUTHOR]

Green technology innovation meets the dual expectation of innovative development and green development perspectives. Under the canonical demand-pull and policy-push theories, a long-term mechanism for green technology innovation could be formed through upstream policy push and downstream demand-pull. Leveraging China's regional carbon emission trading scheme pilots as a quasi-natural experiment, this paper examines the policy-push and demand-pull effects on innovation in renewable energy patents. The data pertain to the city-level renewable energy patents from 2000 to 2020. Based upon the triple difference-in-difference method, results suggest that both policy-push and demand-pull factors exert positive effects on innovation. This paper further explores the practical and theoretical implications of green technology innovation under the new development perspective. [ABSTRACT FROM AUTHOR]

The European Union (EU) Emissions Trading System (ETS) has been established for more than 15 years, but limited attention has been given to how the changing political environment may affect the policy. We address this gap by investigating how the EU enlargement after 2004 affected the ETS and how the effects have been buffered. We develop a framework of institutional resilience to investigate how the established norms and institutional constellation of the EU legislative triumvirate have been instrumental for buffering the effects of the enlargement on ETS policymaking. We find that the existing power structure and functional complementarity of the EU legislative settings have fostered a consensus-building atmosphere in the ETS decision-making to accommodate preference heterogeneity and to absorb the compositional impact after the enlargement. The findings highlight the importance of contextual factors and institutional settings in ETS analysis and suggest a new perspective for assessing dynamic ETS performance. [ABSTRACT FROM AUTHOR]

Sustainability has become a major industry concern in the last decade to maintain the prosperity of current and future generations. A closed-loop supply chain (CLSC) is considered in line with sustainability because it involves the return of used products in manufacturing, which will reduce end-of-life product waste and the use of raw materials. This research has two contributions to the CLSC literature. First, demand and the quantity of returned products are estimated using the Bass model with a certain return rate, which will become the input of the product mix decision model. Second, carbon caps and trade policy is considered in the model to achieve sustainability. The analysis showed that carbon bought and sold are significantly affected by carbon cap threshold, manufacturing cost, and remanufacturing cost in both low- and high-return cases. The profit was not sensitive to the change in carbon cap threshold and remanufacturing cost but was significantly impacted by the change in manufacturing cost. [ABSTRACT FROM AUTHOR]

Climate impact of anthropogenic activities is more and more of public concern. But while CO2 emissions are accounted in emissions trading and mitigation plans, emissions of non-CO2 components contributing to climate change receive much less attention. One of the anthropogenic emission sectors, where non-CO2 effects play an important part, is aviation. Hence, for a quantitative estimate of total aviation climate impact, assessments need to comprise both CO2 and non-CO2 effects (e.g., water vapor, nitrogen dioxide, and contrails), instead of calculating and providing only CO2 impacts. However, while a calculation of CO2 effects relies directly on fuel consumption, for non-CO2 effects detailed information on aircraft trajectory, engine emissions, and ambient atmospheric conditions are required. As often such comprehensive information is not available for all aircraft movements, a simplified calculation method is required to calculate non-CO2 impacts. In our study, we introduce a simple calculation method which allows quantifying climate assessment relying on mission parameters, involving distance and geographic flight region. We present a systematic analysis of simulated climate impact from more than 1000 city pairs with an Airbus A330-200 aircraft depending on the flight distance and flight region to derive simplified but still realistic representation of the non-CO2 climate effects. These new formulas much better represent the climate impact of non-CO2 effects compared to a constant CO2 multiplier. The mean square error decrease from 1.18 for a constant factor down to 0.24 for distance dependent factors and can be reduced even further to 0.19 for a distance and latitude dependent factor. [ABSTRACT FROM AUTHOR]

The integration or segmentation of regional carbon prices implies that barriers may hinder prices from adjusting efficiently and impede linkages between regional carbon markets. Past studies have found that crossregional carbon prices in China tend to diverge, indicating unbalanced regional markets and that carbon cap-and-trade policies may be insufficiently effective. China's carbon trading pilots opened in 2013. Is the integration efficient? This is the research question addressed in this study. This paper uses the carbon prices of four carbon-trading pilot regions in China (i.e. Beijing, Shanghai, Tianjin, and Guangdong) over the period of January 1, 2014, to March 23, 2021, to explore whether prices are correlated across three dimensions: long-term convergence, short-term correlation, and volatility transmission by adopting a vector error correction model with heterogeneous variances. And by using longer-term daily data and empirical tests that can account for the multiple-faceted correlations, this paper provides evidence showing that long-term convergence and risk transfer between the four regional carbon prices exist, which indicates significant regional integration. The results indicate that the price behavior of the Beijing pilot is efficient and that the Shanghai pilot has the lowest volatility. The paper also documents an information transfer pattern. For example, the Beijing pilot is shown to be the leading risk transfer market, whereas the Shanghai pilot is shown to be the market where most risk is transferred. Contrary to findings elsewhere, our main results demonstrate that China's carbon markets exhibit integration efficiency and no imbalance between regions. This may be because the efficiency of China's carbon markets has improved over time. The evidence also implies that if a multi-dimensional correlation has not been considered, it may underestimate the efficiency of regional carbon prices' integration. [ABSTRACT FROM AUTHOR]

Using sample firms from eight energy-intensive industries included in the State Council of China's Notice on the Pilot Work of Carbon Emission Trading from 2015 to 2019, this study examines the relationship between environmental legitimacy pressure and impression management of carbon information disclosure, and explores the moderating effect of political connection on this relationship. The baseline results show that environmental legitimacy pressure is positively associated with impression management of carbon information disclosure, and political connection moderates this relationship, that is, the positive association between environmental legitimacy pressure and impression management of carbon information disclosure in politically-connected firms is stronger than that in non-politically-connected firms. The results are robust to various sensitivity tests. Further analyses show that (i) the positive association between environmental legitimacy pressure and impression management of carbon information disclosure in non-state owned enterprises (non-SOEs) is stronger than that in SOEs, (ii) firms facing higher negative environmental legitimacy pressure have stronger motivation to conduct impression management of carbon information disclosure, (iii) firms facing environmental legitimacy pressure conduct both selective disclosure and expressive manipulation but they have stronger motivation to conduct expressive manipulation. This study extends the literature on impression management of carbon information disclosure. The findings in this study provide policy implications not only for China but also for countries with large carbon emission. [ABSTRACT FROM AUTHOR]