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We examine the effects of environmental regulations on the profitability and value of Korean listed firms, exploiting the first phase of the Korean Emissions Trading System (ETS) as an exogenous shock. While previous studies have mainly focused on environmental regulations in developed countries, often yielding inconclusive results, emerging markets like South Korea remain less explored. Using data on Korean listed firms from 2011 to 2017, we explore the effects of the 2015 Korean ETS on environmental and financial performance in treated firms. We find that treated firms did not reduce their carbon emissions, but their environmental ratings improved. Moreover, the ETS slightly increased profitability but significantly decreased firm value. Treated firms also exhibited a higher systematic risk, indicating that investors account for future carbon risks. In summary, the Korean ETS has not effectively incentivized firms to reduce emissions and has diminished their long‐term value. [ABSTRACT FROM AUTHOR]

In response to the potential green swans event in the future, China is adopting market‐oriented means to encourage green development, specifically through carbon emission trading schemes. At the same time, under the outbreak of the current global pandemic, it is equally important to consider the impact of black swan events. Therefore, this study aims to analyse the fluctuations in carbon emission trading prices under green and black swan events by utilizing daily data from seven carbon emission exchanges in China from 2017 to 2020. The analysis includes the construction of multiple regression models, PVAR models, and panel threshold models. Additionally, the study addresses the endogeneity problem by using instrumental variables. The findings of the study indicate that: (1) Rising temperatures will drive up the carbon emissions trading price, and this impact will persist over time. On the other hand, increased humidity levels and sunshine hours will reduce the carbon emissions trading price. Furthermore, there is a positive correlation between the increase in the price of primary energy and the increase in the carbon emissions trading price. (2) The spread of COVID‐19 has a restraining effect on the increase in temperature and will have a long‐term negative impact on the carbon emissions trading price. (3) The threshold effect concerning the prevalence of pandemics is recognized, which implies that the impact of the epidemic is staged and nonlinear. Overall, the results of this article highlight the importance of a reasonable response to both black swan and green swan events in order to enhance the efficiency of the current emission trading scheme. [ABSTRACT FROM AUTHOR]

With ambitious emission reduction targets presented in the international commitments, Vietnam has a pathway to implement an emission trading scheme (ETS) to curb its carbon emissions. However, research on the impacts of ETS in Vietnam is still unclear, especially since there is no study on ETS revenue redistribution policies. By developing a computable general equilibrium (CGE) model, this paper simulates the potential impacts of the ETS with different revenue redistribution options. The results indicate that to achieve Vietnam's target of 15.8% carbon emission reduction, the carbon price would significantly affect the economy with a GDP drop of 3.7% and a welfare loss of 2.89% of GDP. The revenue redistribution policies would lighten these negative impacts. While transferring to government activities reduces GDP loss, reducing income tax policy results in welfare improvement. At the sectoral level, the electricity sector is most negatively affected and also plays a key role in reducing carbon emissions in Vietnam. The revenue redistribution for government activities could improve outputs for the construction and some heavy industries while the revenue redistribution policy for households creates improvements for light industries and the electricity industry. [ABSTRACT FROM AUTHOR]

Keeping carbon in the loop within the technosphere is a promising idea from a technical perspective when striving for climate‐neutral production. Reporting obligations for greenhouse gases have been focused on release into the atmosphere, often under the tacit assumption that any greenhouse gas (GHG) formed will eventually be emitted. Technologies that build on carbon capture face a situation where regulations are lacking terms to describe processes that produce or use carbon dioxide but do not release it. This work aims to highlight this situation and to provide suggestions to overcome some of the hurdles. [ABSTRACT FROM AUTHOR]

This paper presents the development of a model incorporating two manufacturers in a competitive carbon emissions trading market with varying degrees of market competitiveness. Among them, the manufacturer is in a limited market leadership position, and the game process lies between the Stackelberg game and the Cournot game. Additionally, the Pareto solution sets at various model periods are investigated. In addition, the model examined the effect of dynamic government adjustments on carbon emission limitations. The paper conducts an analysis of the fundamental factors contributing to system instability and evaluates the influence of various factors on the model's stability. At the same time, we also discussed the influence of government adjustment strategy on retail decision‐making and stability. The results highlight that the instability of the system is mainly caused by the adjustment strategy of the market leader, whereby the system becomes increasingly unstable as the market leader's position becomes stronger. In addition, the government's implementation of carbon emission limits will promote market stability. [ABSTRACT FROM AUTHOR]

Based on the carbon emissions trading pilot policy in China, this paper takes Chinese A‐share listed companies from 2012 to 2020 as a sample, and analyzes the role of company's cost transfer capability (ECTC) in the mechanism of market‐incentivized environmental regulation policy (MERP) influencing company green transformation. This paper finds the following four primary results. First, ECTC significantly strengthens the green transformation driving effect of MERP in general. However, results based on the division of ECTC by percentiles show that MERP‐induced green transformation is more pronounced in the top 25% of companies, which distinguishes them from companies in the top 25%–50%, whose cost transfer capacity hampers MERP's contribution to the green transformation. Second, the level of regional economic development, emission regulation, and business reputation have heterogeneous influences on the moderating effect of ECTC. Third, the results based on the moderated mediation model show that ECTC can influence the green transition driving effect of MERP by moderating the two paths of risk‐taking ability and financing constraints of companies. Finally, there is a diffusion effect on the green transformation driven by MERP through cost transfer among companies in non‐pilot industries and non‐pilot regions. [ABSTRACT FROM AUTHOR]

Due to climate change and the urgent need to reduce the greenhouse gas emissions of industrial processes, decarbonizing energy‐intensive industries is highly important. In Europe, emissions trading is the main regulatory instrument providing incentives to replace conventional production facilities with low‐carbon alternatives. Using the example of primary steelmaking, this study aims to evaluate the impacts of product benchmark revisions on the transformation of integrated steel mills. To this end, an optimization model for the strategic planning of economically favorable transformation pathways is developed. The model is combined with a prospective assessment of economic and climate impacts from steelmaking processes. By applying the model to a case study from Germany, legislative conditions in which steel manufacturers are encouraged to transform their production infrastructure are identified. Based on current regulations on product benchmarks for steelmaking, investments into low‐carbon technologies are slowed down until allocations of emissions allowances expire. However, benchmark revisions have the potential to speed up transformation plans significantly. In the analyzed scenarios, the greenhouse gas emissions of primary steelmaking between 2024 and 2034 decreased by up to 15%. These results are further strengthened by sensitivity analyses on the main market influences. Hence, this study provides policy recommendations on favorable revisions of product benchmarks for primary steelmaking. [ABSTRACT FROM AUTHOR]

The objective of this research is to systematically compare the impact of macro determinants on CO2 emissions, using the theoretical frameworks of trade, the Environmental Kuznets Curve, and the Pollution Haven Hypothesis. The study specifically focuses on high‐ and low‐trade‐openness economies from 1995 to 2020. Methodologies employed include stepwise regression, fully modified least squares, pooled ordinary least squares, and fixed effects models. Long‐run dynamics were assessed using Granger causality tests and Pedroni and Johansen cointegration tests. The results indicate both long‐term and short‐term relationships between CO2 emissions and the following variables: (i) gross capital formation (GCF), (ii) per capita income (PCI), (iii) population (POP), and (iv) trade openness. Trade openness has a positive and significant effect on CO2 emissions in highly trade openness economies, whereas it has a negative effect in low trade‐open economies. Highly open economies are more significantly impacted by GCF and POP on CO2 emissions compared with low‐ trade openness economies. Additionally, PCI positively and significantly influences CO2 emissions in low‐ trade openness countries, and this effect is greater than in high‐ trade openness economies. The study also identifies a bidirectional causal relationship between PCI, GCF, and CO2 emissions in both groups of economies, as well as a unidirectional relationship between trade openness, POP, and CO2 emissions in both high‐  and low‐ trade openness countries. [ABSTRACT FROM AUTHOR]

Renewable energy innovations are imperative to tackle the climate change crisis. However, there is a gap in the literature regarding the effectiveness of environmental policies in promoting renewable energy innovations. To bridge this gap, we have adopted a systematic literature review process covering the period from 2005 to 2023. We identified and analysed 29 articles in our final sample. Further, we employ two levels of analysis (individual‐policy and policy‐mix levels) for analysing the extant research. Our findings show that fiscal incentives and emissions trading policies such as the European Union (EU) Emissions Trading System (ETS) consistently promote renewable energy innovations. In contrast, the effectiveness of feed‐in tariffs and quotas in supporting renewable energy innovations varies, reflecting diverse impacts across distinct regions and renewable energy technologies. Our analysis also suggests that combinations of various policy types can enhance innovation more effectively than individual policies. We contribute to the extant literature by developing a classificatory analysis of the effect of environmental policies on renewable energy innovations. Our review also provides research directions for future scholarship. [ABSTRACT FROM AUTHOR]

Carbon prices have grown remarkably in the European Union (EU) Emissions Trading System (ETS) in recent years, raising distributional concerns. Revenues are expected to grow with higher carbon prices, thus providing resources to address distributional issues. Beyond a certain point, however, higher prices can discourage the purchase of allowances and ultimately reduce revenues, describing a Carbon Laffer Curve (CLC). We empirically investigate the CLC in the EU ETS between 2012 and 2021 using auction revenues at the country level. Results indicate that ETS revenues follow an inverted‐U relationship in both the volume and the price of auctioned allowances, with an estimated optimal price between 86 and 125 euros. [ABSTRACT FROM AUTHOR]

The emissions trading system (ETS) is one of the effective measures for energy conservation and emissions reduction, and the impact of the carbon ETS can be reflected in the willingness of enterprises to pay for carbon emissions reductions. However, there has been little research exploring the relationship between the two. Therefore, this study fills this knowledge gap by comprehensively investigating the influence of China carbon ETS policy (ETSP) on the willingness of enterprises to pay for carbon emissions reductions, and incorporates environmental awareness (EA), green technology innovation (GTI), and climate risk awareness (CRA) into the research model, thus constructing a new theoretical framework. Empirical analysis is conducted using the structural equation modeling method based on survey data from 478 Chinese enterprises. The results indicate that: (1) the China carbon ETSP can promote the willingness of enterprises to pay for carbon emissions reductions. (2) The China carbon ETSP can also promote the EA, GTI, and CRA of enterprises. (3) EA, GTI, and CRA can also promote the willingness of enterprises to pay for carbon emissions reductions. (4) Mediation effect analysis revealed that EA and CRA, respectively, play a mediating role in the influence process of the China carbon ETSP on the willingness of enterprises to pay for carbon emissions reductions. However, GTI does not have a mediating effect in this process. (5) Comparative mediation analysis found no significant differences in the mediating effects of EA and CRA. This study provides constructive practical recommendations for future carbon market mechanism construction and enterprise emission reduction policy formulation. It also offers guidance and reference for the behavioral decision‐making of enterprises in carbon market transactions, and carries practical significance and policy advocacy value. [ABSTRACT FROM AUTHOR]

Facing the dual pressures of the exacerbation of global climate change and the deterioration of the domestic environment caused by pollution, China has clearly adopted environmental regulatory measures to improve the climate environment. One measure is the carbon emissions trading scheme (CETS), which serves as a notable example of the country's efforts to improve the climate environment. We gathered panel data from 285 prefecture‐level cities in China from 2005 to 2018 and used the Difference‐in‐Differences (DID) model to empirically examine the synergistic effects of the CETS on carbon emissions and air pollution. The results indicate that CETS have been effective in reducing urban carbon emissions by approximately 9.8%. Additionally, the schemes have caused a simultaneous reduction in particulate matter (PM)2.5 emissions by 11.7% and sulfur dioxide (SO2) emissions by approximately 9.7%, mitigating urban air pollution in China. It demonstrates that the scheme has significant synergistic effects on carbon emissions and air pollution. To achieve synergistic effects of CETS, effective measures include reducing energy intensity and upgrading the industrial structure. The implementation of CETS had heterogeneity in different conditions, and the synergistic effect of the scheme is more significant in eastern regions, large cities, and the final industrial stage. Our findings offer innovative solutions for the integrated management of carbon emissions and air pollution and provide valuable insights for policymakers to enhance China's CETS. Integr Environ Assess Manag 2024;20:1112–1124. © 2023 SETAC Key Points: The carbon emissions trading scheme (CETS) led not only to the significant reduction by approximately 9.8% in carbon dioxide (CO2) emissions, but also effectively mitigated sulfur dioxide emissions by approximately 9.7% and particulate matter (PM)2.5 emissions by approximately 11.7%.This policy highlights the synergistic impact of reducing carbon emissions and air pollution.The effective emission reduction measures of CETS are focused on reducing energy intensity and upgrading industrial structure; the proper implementation of these measures can achieve significant synergistic emission reduction.Based on the heterogeneous analysis of the pilot scheme, the synergistic effects of the CETS are particularly significant in the eastern regions, large cities, and the final industrial stages. [ABSTRACT FROM AUTHOR]

This article examines a supply chain network that considers both economic and environmental factors. The network faces challenges related to multi‐item products and non‐homogenous vehicle types with different costs. Additionally, the production process involves multiple energy sources that emit different levels of air pollution. The main objective is to maximise profits while adhering to different carbon policies. To achieve this goal, the paper presents several supply chain models that are compared under different schemes: no carbon policy (basic one), carbon tax policy, carbon emission policy and carbon trading policy. These models were coded and solved to demonstrate their effectiveness for different conditions and scenarios. The results provide valuable insights for supply chain managers, enabling them to make well‐established decisions for executive planning. [ABSTRACT FROM AUTHOR]

We examine how environmental pressure influences board gender diversity. Drawing from resource dependence, strategic adaptation, and gender socialization theories, we develop and test the prediction that firms with worse environmental performance have a higher likelihood of increasing their board gender diversity following a rise in environmental pressure. Focusing on the third phase (2013–2019) of the European Union Emission Trading System (EU ETS), we exploit the unexpected increase in emission prices after the European Council's (EC) intervention in 2017 as a quasi‐natural experiment bringing heightened environmental pressure to firms. Our baseline sample consists of 182 polluting firms in 20 different EU ETS‐covered countries. In line with our main hypothesis, we find that board gender diversity increases with firms' industry‐adjusted levels of pollution in the post‐EC intervention period, with the effect being particularly pronounced for firms with a higher exposure to emission prices and lower diversity levels. Inconsistent with a window dressing explanation, highly polluting firms replace incumbent male board members with highly qualified women. Our findings, which survive several robustness tests, suggest that more stringent environmental regulation drives social and governance changes at top corporate levels. [ABSTRACT FROM AUTHOR]

With the increasing requirements for environmental protection, authorities have enacted different carbon policies to promote sustainable practices. This study considers the competition among different manufacturers and multiple demand markets in the supply chain network. We examine and compare their equilibrium decision conditions under three common carbon policies: carbon cap, carbon cap‐and‐trade, and carbon tax. Results suggest that under lower carbon caps, manufacturers greatly reduce their carbon emissions by reducing production quantities, which causes a decrease in profits. However, an appropriate carbon cap size can not only motivate manufacturers to reduce carbon emissions but also improve their profits. Under a certain price for carbon credit, the effectiveness of a carbon cap‐and‐trade policy is similar to that of a carbon cap policy, but it has more flexibility. Carbon tax is effective, but it brings more tax burden to manufacturers. We provide implications for companies to optimize their production methods to achieve sustainability. [ABSTRACT FROM AUTHOR]

We investigate green technology unilateral licensing strategies between two competing manufacturers under carbon cap‐and‐trade policy. We construct Nash game models and compare the optimal strategies in the unilateral licensing situation with the no‐licensing situation. Comprehensive numerical experiments are taken to investigate the influence of some key parameters on optimal decisions. Our findings show that the green technology unilateral licensing strategy may benefit consumers; when green technology improvement is high, manufacturers tend to take the unilateral licensing strategy to obtain more profits; when initial unit carbon emission difference is moderate or large, the optimal strategy is that the manufacturer with lower level of green technology acts as the licensor; green technology unilateral licensing strategy may not necessarily reduce all manufacturers' total carbon emissions; only when green technology improvement is high, the unilateral licensing strategy is beneficial to environmental protection. [ABSTRACT FROM AUTHOR]

Although both the carbon emission trading market (CETM) and government regulatory actions promote companies' green technology innovation (GTI), little research has considered whether such innovation is substantial. In this paper, we categorize companies' GTI strategies into substantial innovation and strategic innovation. Considering market powers, the heterogeneity of companies, and the mutual influence of governments and companies, we construct a tripartite evolutionary game model that involves large and small companies and the government and conduct a simulation utilizing data on China's CETM. Our findings reveal that carbon trading prices, innovation subsidies, and the government's verification mechanism are the main factors that affect companies' choices regarding substantial innovation. However, the current carbon trading prices in China are relatively low, and companies are still likely to choose strategic innovation. Moreover, we find that when the substantial innovation of large companies exerts a greater impact on the product revenues of small companies, small companies are more inclined to choose substantial innovation. Therefore, in an effort to induce companies to choose substantial innovation, the CETM should play the leading role in this situation, and the government should implement different innovation subsidies and improve the verification mechanism. [ABSTRACT FROM AUTHOR]

Considering customers' preferences for low‐carbon products, the paper delves into the short‐run and long‐run repetitive game involving three oligopolistic manufacturers engaged in the production of new energy vehicles (hybrid electric vehicles [HEV] and battery electric vehicles [BEV]) and conventional fuel vehicles (FV) within the framework of a carbon cap‐and‐trade policy (CaT). In the short‐run game model, this study explores the optimal decision of oligarchic manufacturers and analyzes the efficiency of the supply chain in the context of cooperation and non‐cooperation. In the long‐run repetitive scenario, the article examines the optimal decision of the manufacturer, assuming rational economic behavior aimed at maximizing individual profits within a non‐cooperation game strategy. Finally, the paper investigates the elements that influence the efficiency of the supply chain. The results reveal that (1) fuel vehicles possess greater flexibility in adjusting parameters compared to the other vehicle types; a judicious increase in manufacturers' price adjustment parameters in the stability domain is beneficial to their respective profits and enhances the overall supply chain profitability. (2) Maintaining customers' preference for low‐carbon products within a reasonable range is crucial for the mutual benefit of all manufacturers. (3) The government needs to allocate more carbon emission limits to fuel vehicle manufacturers in order to improve supply chain efficiency. [ABSTRACT FROM AUTHOR]

Coal‐fired power plants minimize costs subject to output and emission constraints. We model the plants' choice of coal quality and emission abatement to minimize costs under these constraints, allowing for heterogeneous unobserved generation productivity and abatement efficiency. We derive and estimate the plants' cost functions to recover the production technologies. Our data set is a balanced panel of 76 U.S. coal‐fired power plants from 1995 to 2005, when the emission permit trading system was viable. We find a dramatic growth in abatement efficiency, a major goal of the Acid Rain Program. By contrast, the growth in generation productivity is positive but small. [ABSTRACT FROM AUTHOR]

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As an effective measure for the local government to promote reduction of corporate carbon emissions and sustainable development of social economy, the implementation of green finance policies in enterprises and financial institutions has encountered severe strikes from the low returns of low carbon production and low interest rates of green credit business. Under the premise of liberalizing carbon emissions trading, a triple‐level network evolutionary game consisting of a local government, banks, and enterprises is constructed to analyze response behavior and strategy selection mechanism to green credit. The impacts of management tools are investigated in terms of setting carbon market price, limiting the financing upper bound of misbehaving enterprises, limiting the emissions quota of enterprises for fraudulent green credit, and rewarding clean project development on the decisions of individuals in the network. Results show the following: First, increasing the trading price of carbon emissions has a catalytic effect on enhancing the activeness of banks and enterprises to follow green finance policies, but the autonomous regulation ability of which is limited. Second, reducing the funding ceiling for emitting emissions illegally ambiguates enterprises' preferences for production strategies and discourages them from undertaking low‐carbon projects. Third, excessive restrictions on the share of emissions may evoke regulatory inaction by the local government, consequently leading to instability in the evolution network. Fourth, granting reward for clean production is instrumental for the network to promote green finance policies, but exorbitant subsidies increase the fiscal burden of the local government with no significant effect on the node selection of environment‐friendly strategies. [ABSTRACT FROM AUTHOR]

Research Question/Issue: We examine the association between foreign institutional ownership and climate change disclosure quality from 2006 to 2018 across 34 countries. We find that firms with a higher level of foreign institutional ownership demonstrate better quality climate change disclosures, whereas domestic institutional ownership has immaterial impacts on such disclosures. We utilize a difference‐in‐differences (DiD) analysis using a firm's addition to the Morgan Stanley Capital International (MSCI) index as an exogenous shock to control for endogeneity. Our findings are robust to various other endogeneity controls. We also establish evidence on an indirect effect of climate change disclosure quality in mediating the positive association between foreign institutional investors and firm valuation. Research Findings/Insights: We find that the positive association between foreign institutional ownership and climate change disclosure quality is more pronounced for (1) firms domiciled in stakeholder‐orientated countries, (2) firms domiciled in countries that adopt emission trading schemes, and (3) firms with a greater level of information asymmetry. Additionally, our results are more robust when foreign investors are domiciled in countries that care more about the environment. Theoretical/Academic Implications: Our study contributes to climate change disclosures, corporate governance, and international business literature by showing that foreign rather than domestic institutional investors contribute to improved corporate climate change disclosure quality in their portfolio firms. Practitioner/Policy Implications: Our study urges regulators to increase their market oversight, especially in firms with less foreign institutional ownership. This is required because such firms are prone to exhibiting poorer accountability for their climate risk management practices, and their disclosures are bereft of effective external monitoring mechanisms. [ABSTRACT FROM AUTHOR]

In 2013, the European Union's Emission Trading Scheme (EU‐ETS) entered Phase III. The majority of emission permits in Phase III are auctioned instead of being allocated for free as in Phases I and II. Using a difference‐in‐differences method, we show that this change has led to an increase in the financial distress risk of the EU‐ETS‐regulated firms when compared to unregulated firms, suggesting that the EU‐ETS imposes a significant financial burden on regulated firms. This result is robust to an array of validation tests, alleviating concerns that it is driven by unobserved factors. In additional analyses we show that the increase in distress risk of regulated firms during Phase III can be explained by, (i) an additional climate regulation cost to purchase pollution permits and (ii) a low average environmental score that possibly (via high sustainability risk) lowers investors expectations regarding firms' performance. Our findings also show that the distress risk increase is higher for regulated firms operating within countries with lower control of corruption, government effectiveness, political stability, regulatory quality, rule of law, and voice accountability before the EU‐ETS implementation. [ABSTRACT FROM AUTHOR]

In the context of trade protectionism impacting economic and environmental sustainability, a more comprehensive understanding of the impact of trade on carbon emissions is critical to economic and environmental sustainability. Existing literature mainly explores the impact of trade on carbon emissions from the perspective of trade openness, neglecting the perspectives of trade diversification and trade direction. This study aims to fill this gap by investigating the impact of trade openness (measured by trade volume, import, and export), and trade diversification (measured by import diversification and export diversification) on carbon emissions based on data from OECD and G20 countries between 1997 and 2019. The study further explores the heterogeneity, asymmetry, and mediation effects. The results demonstrate that (i) the impact of trade on carbon emissions is heterogeneous, with trade openness leads to an increase in carbon emissions, while trade diversification leads to a reduction in carbon emissions. Moreover, import diversification has the strongest effect on reducing carbon emissions. (ii) The impact of trade openness on carbon emissions is asymmetry. Trade openness increases carbon emissions at 10%–50% quantile levels and reduces carbon emissions at 80%–90% quantile levels. However, the impact of trade diversification on carbon emissions is consistent. (iii) The impact of trade openness on carbon emissions is mediated by technology effect and structural effect. On one hand, trade openness leads to an increase in carbon emissions by the industrial structure. On the other hand, it contributes to the reduction of carbon emissions by technological progress. These findings could serve to better understand the complexity of free trade's impact on economic and environmental sustainability. [ABSTRACT FROM AUTHOR]

In April 2023, the EU institutions finally adopted an innovative international climate policy instrument: the Carbon Border Adjustment Mechanism (CBAM). As the long and winding road to a CBAM has included significant EU‐internal and EU‐external opposition, a “shifting Multi‐Level Reinforcement” (MLR) perspective is helpful for understanding this development. When France assumed initial leadership from 2007, skepticism to the WTO, generous amounts of free allowances, combined with a low carbon price, provided a strong oppositional force. Then, influential elements in the European Parliament called for a carbon border tax, which was subsequently included as a central ingredient in the “Fit for 55” package launched by the Commission, In the decisionmaking process, leadership involving all the previous forces resulted in an institutional reinforcement dynamic strong enough to counter EU‐internal as well as EU‐external challenges and ‘turbulence’. This case shows the relevance of an updated MLR perspective for understanding also other EU processes, taking into account the growing role of both policy packages and trilogues as decisionmaking tools, indicating a possible strengthened role for the Commission also in the decisionmaking phase. [ABSTRACT FROM AUTHOR]

Reducing greenhouse gas emissions is necessary to meet climate goals, but these emissions are not the only harmful bi‐products of fossil‐fuel combustion. This paper shows how a regional cap‐and‐trade program designed to regulate CO2 emissions affects the release of federally‐regulated toxins in the Toxics Release Inventory. We find that the program reduces toxic releases from coal‐fired electric plants by 78%, and that harmful metal releases (e.g., lead, mercury) have fallen by 54%. There is no evidence of spillovers into non‐adopting areas. This unintended beneficial effect of the carbon dioxide cap‐and‐trade policy provides compelling evidence of the co‐abatement of harmful compounds alongside greenhouse gas emissions. [ABSTRACT FROM AUTHOR]

The European Union (EU) began developing climate policy in the 1990s. Since then, it has built up a broad portfolio of mitigation policy measures and governance tools, including legally binding targets to reduce greenhouse gas (GHG) emissions, and policy measures addressing emissions trading, renewable energy, energy efficiency, and more. In 2019, the European Commission—the EU's executive arm—published the European Green Deal (EGD), an overarching policy framework to achieve the goal of climate neutrality by 2050. The EGD aims to push EU climate policy and governance far beyond incremental policy development. In this article, we ask: does the EGD represent a break from past patterns of EU climate governance? We argue that it maintains several past patterns, but nevertheless breaks from other established policy and governance trends. We review insights from politicization and new institutionalist theoretical lenses to help us understand these findings. We reveal certain tensions and challenges inherent in the EU's climate governance approach—around speed and coherence, effectiveness and just transition—that highlight future research needs, and raise questions about the EU's ability to implement its climate policy goals. This article is categorized under:Policy and Governance > Multilevel and Transnational Climate Change Governance [ABSTRACT FROM AUTHOR]

The low‐carbon development of integrated energy systems is achieved via the sharing of multiple energy interactions by park‐level IES (PIES).However, coordinating profit distribution conflicts among complex interactive stakeholders in stochastic scenarios is challenging. Accordingly, this study proposes a novel tri‐layer framework that aggregates different game mechanisms to investigate the interactions between PIESs and coupled energy markets. First, a linkage trading mechanism is proposed by integrating carbon emissions trading and green certificate trading, which establishes a coupled electricity‐carbon‐green certificate market. Consequently, a park aggregation operator acts as an intermediary between PIESs and the coupled market, setting upper‐level purchase and sale prices to guide unit generation in each PIES using the Stackelberg game theory. Subsequently, the Nash game theory is applied to realize cooperative bargaining among PIESs for a fair revenue distribution. Further, the impact of uncertain environments is considered by utilizing stochastic scenario methods and the conditional value‐at‐risk theory. To protect the privacy of each participating agent while improving the convergence speed, a differential evolutionary method is combined with analysis target cascading to solve the framework. Finally, the proposed scheduling method is validated by utilizing a typical case to optimize conflicting PIES interests in multiple scenarios and realize decarbonisation. [ABSTRACT FROM AUTHOR]

Emissions trading schemes (ETS) have spread across the globe to tackle climate change. However, limited attention has been given to how ETS characteristics and designs differ and why. We use the concept of institutional complementarity to explore how the EU ETS and South Korea's ETS (K‐ETS) adapt to complement established political economy. The EU ETS is characterized as a market with stakeholder ownership, while the K‐ETS is more regulatory in nature with government leadership. The EU ETS complements a decentralized political system with liberalized energy market, and the K‐ETS became compatible with the centralized majoritarian politics and a regulated electricity market. The ETSs have evolved incrementally, and they are not likely to link in the foreseeable future due to divergence. We suggest a strong focus on "how to adapt" an ETS to its own institution rather than adopting the established blueprint model in countries with a strong regulatory style of governance. Related Articles: Caliskan, Cantay. 2020. "The Influence of Elite Networks on Green Policy Making." Politics & Policy 48(6): 1104–37. https://doi.org/10.1111/polp.12382. Tanaka, Yugo, Andrew Chapman, Tetsuo Tezuka, and Shigeki Sakurai. 2020. "Multiple Streams and Power Sector Policy Change: Evidence from the Feed‐In Tariff Policy Process in Japan." Politics & Policy 48(3): 464–89. https://doi.org/10.1111/polp.12357. von Malmborg, Fredrik. 2023. "Combining the Advocacy Coalition Framework and Argumentative Discourse Analysis: The Case of the 'Energy Efficiency First' Principle in EU Energy and Climate Policy." Politics & Policy 51(2): 222–41. https://doi.org/10.1111/polp.12525. [ABSTRACT FROM AUTHOR]

Emissions trading and nature‐based solutions, particularly REDD+, have lent themselves to the critical literature on the "socioecological fix" in neoliberal capital accumulation and state regulation. Prone to reversals, land conflict, and leakage, these mechanisms displace the burden of carbon emissions reductions to global South countries, promote new green commodities, and thus increase rather than curb the chance of capital accumulations by big polluters. Studies of existing REDD+ projects register the privatisation of forest management on the one hand and "aidification" on the other, suggesting impediments to fully commodifying forest carbon ranging from social movement resistance to technical issues. This case study of Brazil's national Amazon Fund points to global South protagonism in constructing and negotiating REDD+, challenging Northern and market hegemonies. Progressive Southern actors use the political space of the fix to defend rural communities' territorial rights and demand resources in line with historic responsibilities and climate justice. [ABSTRACT FROM AUTHOR]

Negative carbon emissions options are required to meet long‐term climate goals in many countries. One way to incentivise these options is by paying farmers for carbon sequestered by forests through an emissions trading scheme (ETS). New Zealand has a comprehensive ETS, which includes incentives for farmers to plant permanent exotic forests. This research uses an economy‐wide model, a forestry model and land use change functions to measure the expected proportion of farmers with trees at harvesting age that will change land use from production to permanent forests in New Zealand from 2014 to 2050. We also estimate the impacts on carbon sequestration, the carbon price, gross emissions, GDP and welfare. When there is forestry land use change, the results indicate that the responsiveness of land owners to the carbon price has a measured impact on carbon sequestration. For example, under the fastest land use change scenario, carbon sequestration reaches 29.93 Mt CO2e by 2050 compared to 23.41 Mt CO2e in the no land use change scenario (a 28% increase). Even under the slowest land use change scenario, carbon sequestration is 25.89 Mt CO2e by 2050 (an 11% increase compared with no land use change). This is because, if foresters decide not to switch to permanent forests in 1 year, carbon prices and ultimately incentives to convert to permanent forests will be higher in future years. [ABSTRACT FROM AUTHOR]

China has pledged to peak carbon emissions by 2030 and to become carbon neutral by 2060. Achieving the targets would need great improvement of its emissions trading scheme (ETS) that covers half of the country's emissions. Lessons from the European Union have shown that the ETS is not only a product of the changing circumstances, but its implementation and revisions are also continuously affected by the evolving context. Using a political economy perspective, we examine whether the changing environment is also affecting China's ETS. Our analysis centres on two recent contextual dynamics with relevance to the ETS: (1) the change in the ETS authority in 2018; and (2) the impacts of the deteriorating economic environment on the climate‐energy policy complex. We find that China's ETS and its broad climate ambitions are still constrained by the tensions between the long‐term socio‐economic benefits of low‐carbon policies and the short‐term economic interests behind the government's policy motives, which led to conflicting interests and priorities among regulatory agencies and local governments. The analysis contributes to the political economy debates on emissions trading and China's environmental governance. It also provides practical insights to the policymakers with an in‐depth inquiry into the structural barriers to China's net‐zero targets. [ABSTRACT FROM AUTHOR]

The study examines the determinants of the quality of carbon reporting (QCR) by top listed firms of a developed country. Using a sample of the top 50 listed firms of New Zealand (NZ) sampled over a period of 6 years (2015–2020), the study measured QCR index using 14‐items and analysed the data using regression analysis. The study finds that external factors, namely, carbon regulation (Emission Trading Scheme—ETS law), use of a standardised reporting format for non‐financial reporting (Global Reporting Initiative, GRI) template, and environmental and social (E&S) performance, all positively influence the QCR. The study also finds that corporate governance attributes namely board diversity (women's representation on the board) and board size positively influence the QCR. Lastly, the study finds that top firms in NZ have many areas of improvement in reporting quality carbon information. The study is the first empirical research on QCR from NZ firms that evidences multiple institutional factors and governance elements as key explanatory factors driving towards making carbon reporting credible and reliable. [ABSTRACT FROM AUTHOR]

The carbon emissions trading scheme (CETS) is an important institutional innovation that internalizes external costs caused by corporate carbon emissions and promotes firms to engage in green development. Based on a 2009–2019 sample of Chinese enterprises of heavily polluting industries listed on the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE), this paper employs the difference‐in‐differences model to examine the effect of CETS on corporate green investment and discuss the moderating effects of external pressure and internal incentive. We find that the implementation of CETS significantly promotes corporate green investment, and this finding still holds after a series of robustness tests such as Propensity Score Matching‐Difference in Differences (PSM‐DID) method and alternative measure of green investment. The heterogeneity analysis indicates that the positive effect of CETS is stronger in large‐scale enterprises, state‐owned firms, and companies located in regions with strict environmental regulation. In addition, less local government intervention and more internal executive compensation incentive significantly enhance the positive impact of CETS on corporate green investment. [ABSTRACT FROM AUTHOR]

This paper examines the impact of green finance and carbon emission performance, as well as the mechanisms, using data from 30 Chinese provinces for the time frame of 2008–2018. The findings show that (1) the level of green finance development significantly enhances carbon emission performance, where industrial structure, foreign direct investment, and population density are all important control variables affecting carbon emission performance. (2) Energy consumption structure, green industry, and green patented technology are all mediating variables for the level of green finance development to enhance carbon emission performance. Meanwhile, the effects of green finance development on carbon emission performance are nonlinear under varying economic growth, industrial structure, and urbanization levels. (3) After addressing the spatial autocorrelation of carbon emission performance, the level of green finance development still significantly enhances carbon emission performance. (4) The level of green finance development in China's eastern provinces, pilot provinces of carbon emission trading, and provinces with abundant coal resources can more significantly enhance carbon emission performance. On this basis, this paper makes specific suggestions for green finance to enhance carbon emission performance. [ABSTRACT FROM AUTHOR]

The emissions trading scheme (ETS) is a key policy tool for reducing carbon emissions and combating climate change but may cause unintended social‐economic consequences. Clarifying the role of city heterogeneity can contribute to improving ETS policy and informing green development roadmaps. Using panel data of 274 Chinese prefecture‐level cities, the heterogeneous impacts of ETS on city green development efficiency (CGDE) were assessed by the difference in difference in difference (DDD) method. The results show that: the ETS significantly advances China's CGDE, mainly through inducing cities' green innovation. More insightfully, the ETS policy has more significant positive effects on the cities in the eastern region, high economic development, resource abundance, and good environmental governance than otherwise. The study suggests that designing the ETS should incorporate the cities' heterogeneous characteristics to accelerate green development through green innovation and cover more regions and industries. [ABSTRACT FROM AUTHOR]

We introduce polluting emissions in a sequential noncooperative oligopoly model of bilateral exchange. In one sector, a leader and a follower use polluting technologies which create negative externalities on the payoffs of strategic traders who belong to the other sector. By modeling emissions as a negative externality, we show that the leader pollutes more (less) than the follower when strategies are substitutes (complements). Then, we consider the implementation of public policies to control the levels of emissions, namely, two taxation mechanisms and a permit market. We study the effects of these public policies. Moreover, we determine the conditions under which these public policies can implement a Pareto‐improving allocation. [ABSTRACT FROM AUTHOR]

Consolidating and expanding poverty alleviation while simultaneously reducing carbon emissions has become one of the main issues facing China. The Chinese Certified Emission Reduction (CCER) trading programme is an important supplementary mechanism to China's carbon trading market. Based on the data of 1782 counties in China from 2006 to 2017 and a difference‐in‐differences model, this study investigates the rural poverty reduction effect of CCER trading. We find that: (1) during the sample period, CCER trading has increased the per capita net income of rural residents by at least 2.5% or 187.5 RMB (about 27.8 USD or 39.3 AUD) per year. (2) The poverty reduction effect of CCER trading in poor counties is greater than that in nonpoor counties. (3) Some relevant heterogeneous effects are also measured. We find that CCER trading of hydropower projects has played a significant poverty reduction effect; the poverty reduction effect is further enhanced when the county has additional CCER projects; we also identify regional differences with CCER trading having a greater poverty reduction effect in the western and central regions. (4) Compared with the implementation of the CCER project, trading the emission reductions generated by the CCER project has brought more significant poverty reduction effects. [ABSTRACT FROM AUTHOR]

In the California compliance cap‐and‐trade carbon market, improved forest management (IFM) projects generate carbon credits in the initial reporting period if their initial carbon stocks are greater than a baseline. This baseline is informed by a "common practice" stocking value, which represents the average carbon stocks of surveyed privately owned forests that are classified into the same general forest type by the California Air Resources Board. Recent work has called attention to the need for more ecologically informed common practice carbon stocking values for IFM projects, particularly those in areas with sharp ecological gradients. Current methods for estimating common practice produce biases in baseline carbon values that lead to a clustering of IFM projects in geographical areas and ecosystem types that in fact support much greater forest carbon stocks than reflected in the common practice. This phenomenon compromises additionality, or the increases in carbon sequestration or decreases in carbon emissions that would not have occurred in the absence of carbon crediting. This study seeks to expand upon recent work on this topic and establish unbiased common practice estimates along sharp ecological gradients using methods that do not rely upon discrete forest classification. We generated common practice values for credited IFM projects in the Southern Cascades using a principal components analysis on species composition over an extensive forest inventory to determine the ecological similarity between inventoried forests and IFM project sites. Our findings strengthen the results of recent research suggesting common practice bias and adverse selection. At several sites, even after controlling for private ownership, 100% of the initial carbon stocks could be explained by ecological variables. This result means that improved management did not preserve or increase carbon stocks above what was typical, suggesting that no carbon offsets should have been issued for these sites. This result reveals greater bias than that been found at project sites in this region by research that has used discrete forest categorization. [ABSTRACT FROM AUTHOR]

Research at the biophysical level constitutes the main approach to study the path through which climate influences infectious diseases, but the influence of socioeconomic factors on climate change and the spread of infectious diseases also cannot be ignored. In the current context, with its emphasis on carbon emission reduction, countries have begun to adopt "total control and trading" methods to reduce greenhouse gas emissions. This paper is based on the monthly relevant data of various provinces and cities from 2015 to 2019, adds the moderating variable of "carbon emission trading volume" based on current research results, establishes a static model of unbalanced panel fixed effects and a dynamic panel model, and deeply analyzes the impact of climate change on infectious disease popularity and the moderating effect of the carbon trading market. The study found that climate warming, frequent precipitation, and shortened sunshine duration will lead to an increase in the number of infectious disease cases and that the "carbon emission trading volume" variable plays a negative role in the positive correlation between climate change (temperature/precipitation) and the number of infectious disease cases. There are seasonal differences, and the moderating effect in summer/autumn is more obvious than that in winter/spring. [ABSTRACT FROM AUTHOR]

Trade adjusted or consumption‐based carbon emissions relatively is a new area of research. Trade adjusted carbon emissions is adjusted by deducting exports, adding imports and production based carbon emissions. This measure enables to capture the importance or contribution of international trade to global carbon emissions. This study further highlights each country's contribution to global carbon emissions through trade. This study aims to explore the possible determinants of trade adjusted carbon emissions for group of seven economies from 2000–2020. This study used a novel index for financial inclusion along with the role of environment related taxes and environment related innovation is also tested. The study uses non parametric method of panel data, that is, method of moments quantile regression, along with panel cointegration and diagnostic tests to detect interdependence and heterogeneity in the slop. Moreover, this study also tested the role of exports and imports with GDP for trade adjusted carbon emissions. The empirical findings from this study suggest that exports, environment related innovation and taxes and financial inclusion cause a reduction in trade or consumption‐based carbon emissions. Moreover, both imports and gross domestic product cause an upsurge in consumption or trade adjusted carbon emissions. This study provides practical policy implications in the light of empirical findings related to environment related taxes, financial inclusion, exports, environment related innovations, imports and gross domestic product. [ABSTRACT FROM AUTHOR]

In 1989, Steve Rayner chided fellow anthropologists for "fiddling while the world warms." This was the starting point of a decades‐long application to human‐made climate change of the cultural theory that he had developed with Mary Douglas and Michael Thompson. It culminated in a call to develop "clumsy" solutions for addressing the issue. Since then, the concept of clumsy solutions has been applied, praised, and criticised. To clarify its strengths and weaknesses, I first set out cultural theory and explain how the notion of clumsy solutions was derived from it. I then assess the extent to which this notion has increased our understanding of climate change governance. I do so by breaking up the application of this concept into seven predictions, concerning: (1) the major perspectives among stakeholders on how to resolve climate change; (2) the fate of the 1997 Kyoto Protocol; (3) the feasibility of international emissions trading; (4) the possibility of making renewable energy competitive; (5) the need for domestic governmental action to realize this possibility; (6) the effectiveness of a nonbinding global treaty to combat climate change; and (7) the need to explore adaptation, carbon capture, and geoengineering. I show that these predictions have stood the test of time. Finally, I discuss the roles that the concept of clumsy solutions can play in future climate change governance. This article is written in memory of Steve Rayner, one of the first social scientists to focus on climate change. This article is categorized under:Social Status of Climate Change Knowledge > Sociology/Anthropology of Climate KnowledgeClimate, History, Society, Culture > Thought Leaders [ABSTRACT FROM AUTHOR]

Firms tend to bank permits excessively, resulting in a lack of supply in the market and uncertainty regarding the ability to achieve the planned emissions target. This excessive banking preference is difficult to explain in terms of rational cost minimization for regulatory compliance. This study provides hypotheses to explain banking preference using cognitive bias concepts such as prospect theory, mental accounting, and regret aversion. The hypotheses are supported by three survey‐based experiments. This view of cognitive bias on banking preference justifies the use of active measures to prevent excessive banking, such as market makers and market restrictions. [ABSTRACT FROM AUTHOR]

Concern around the employment impacts of climate mitigation policies can be a contentious and politized issue, with potentially limiting implications for climate action. It persists despite a significant ex ante literature that suggests that aggregate effects will most likely be limited and net positive. This review analyses 60 papers assessing the employment impacts of climate policies ex post, in 20 countries and 2 country groups. Eight broad mitigation policies are covered: (1) emissions trading, (2) carbon taxes, (3) feed‐in tariffs, renewable energy (4) procurement and (5) deployment, (6) green economy/jobs, (7) environmental regulation, and (8) other policies and regulations. The analysis confirms that employment impacts tend to be modest and net positive or neutral, but reveals that distributional outcomes can be uneven, disadvantaging certain groups and at times reinforcing existing inequalities. Additionally, lower quality jobs or weak labor market regulations may decrease the attractiveness of jobs created or increase job transition costs. These findings provide some justification for increased focus on how climate policies can ensure a "just transition of the workforce and the creation of decent work and quality jobs" stipulated in the Paris Agreement, but also suggest that climate action should not be delayed for fear of widespread negative employment impacts. Ex post assessments offer an important lens into the determinants of climate policy employment outcomes and should be advanced and harnessed in support of accelerated and just action. This article is categorized under:Economics of Mitigation > Climate EconomicsSocial Justice and the Politics of Development > Climate and Development [ABSTRACT FROM AUTHOR]

The European Union's pioneering carbon Emissions Trading System, the EU ETS, has inspired countries around the world to launch their own CO2 markets. This paper analyses the evolution of the EU ETS from a political economy perspective, emphasizing the interaction of economic principles and political interests at pivotal moments, and showing how each compromise changed the scope for future design choices. We focus on the allowance allocation issue, which provides a window into the complex tug‐of‐war between economic efficiency and the politics of distribution. Our account highlights the dynamic nature of CO2 market reform, and provides lessons that can help inform the design of more stable and effective CO2 markets in the future. This article is categorized under:Climate Economics > Economics of MitigationThe Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior [ABSTRACT FROM AUTHOR]

The paid use and trading of emission permits system are a major mechanistic innovation in the field of environmental resources management in China. In this system, manufacturers must purchase emission permits on the primary market under the precondition that the purchase ceiling and price will be determined by the government; subsequently, they may trade emission permits with other manufacturers on the secondary market subject to established rules. This inevitably leads to uncertainty regarding the emissions trading price on the secondary market, while the manufacturer is making the initial purchase decision; it highlights the need to investigate optimal purchase planning solutions under conditions of uncertainty from the perspective of production optimisation. This paper examines the manufacturer's random profit function, as well as its mean and variance, under uncertain emission trading prices. Using the mean–variance framework, an optimisation model with differentiated decision objectives is established. Accordingly, the manufacturer's optimal initial purchase planning approach is demonstrated with respect to each decision objective. The conclusions demonstrate that when the manufacturer exhibits risk preference, the optimal purchase planning process may systematically deviate from the risk‐neutral approach. [ABSTRACT FROM AUTHOR]

Preliminary explorations have been conducted on the SO2 emission trading system (ETS) in China, but existing studies have paid little attention to the system's emission reduction effect and the effect mechanism. Based on panel data of Chinese cities, this paper empirically examines the influence and mechanism of the SO2 ETS on urban SO2 emission. In addition, considering the role of government in local environmental governance, this paper also examines synergies between government environmental regulations and the SO2 ETS. The SO2 ETS significantly suppresses urban SO2 emission, but under more extreme levels of urban SO2 pollution, this emission reduction effect gradually weakens until it is no longer significant. The implementation of more stringent environmental regulations by local governments strengthens the emission reduction effect. The analysis of intermediary effects shows that the SO2 ETS promotes the reduction of urban SO2 emission by stimulating green technological innovation, promoting industrial structure adjustment, and channeling investment towards green assets, with the latter intermediary effect being stronger than the former two. This paper affirms the important role of ETSs in the development of the green economy and provides an empirical basis for countries to introduce market mechanisms to solve environmental challenges and leverage the role of government environmental regulation. [ABSTRACT FROM AUTHOR]

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China has set a carbon neutrality target for 2060; carbon sinks are vital tools to meet this target. China is leading the effort in greening the world through the restoration of low‐carbon density ecosystems (LCDEs). The potential carbon sinks of LCDEs provide opportunities for carbon trading projects that make cash benefits accessible to the owners, thereby incentivising ecosystem restoration. Unfortunately, carbon trading in LCDEs has, to date, been unsuccessful in China. Therefore, it is important to identify the barriers in the development of carbon trading projects in LCDEs.This study aimed at creating a feasible model for carbon trading in LCDEs in China. We first accounted for the carbon sink of LCDEs based on field sampling of 169 quadrants and 3,471 plants. Thereafter, we investigated the trade‐off between the cost and efficiency of carbon projects in LCDEs. Finally, we explored the feasibility of corresponding carbon sink potential by considering carbon price fluctuations and public–private partnership models.The main findings were as follows: (a) Carbon trading in LCDEs is not economically feasible at the current market price of carbon. In our case, the LCDE carbon trading could only recover 41.72% of the project cost. This partially explains the scarcity of carbon trading for LCDEs in the current emission trading scheme; (b) A benefit transfer model is essential, wherein the costs of ecosystem restoration are paid by the central government, and the benefits of carbon trade are transferred to the owners of LCDEs, providing sufficient incentives for the owners to participate in carbon trading.Policy implications. Given the scarcity of large‐scale organisations and expertise, carbon trading in low‐carbon density ecosystems (LCDEs) should not be treated as a purely commercial project. A public–private partnership network is a suitable model for engaging stakeholders to complete the carbon trading process in LCDEs. For the success of carbon trading in LCDEs, viable carbon prices and transfer of benefits from public investments are policy issues that need to be further explored. Our findings provide a policy basis for the Chinese government to mobilise more LCDE owners to enter the carbon market and achieve carbon neutrality. [ABSTRACT FROM AUTHOR]

New Environmental Markets I focus on two new environmental markets: carbon markets (the buying and selling of emission credits) and biodiversity offsetting (compensating for the adverse impact on nature of an economic development with another nature conservation project). This is a specific case - voluntary trading between companies in a high-income region - but it shows that there I can be i acceptable environmental markets, in particular when goods (for example, homogenous ones) and actors (for example, companies) fit market norms. A combination of existing markets, new markets (for example, carbon trading), and hypothetical markets (environmental valuation and cost-benefit analyses) should allow for socially optimal outcomes. Should there be markets for environmental goods?. [Extracted from the article]