Search

The emissions trading scheme (ETS) is considered an effective policy tool for achieving emission reductions. At present, China’s ETS pilots have completed several compliance periods and provided rich experience for a national ETS. Taking advantage of the variations in the regional ETS pilots across regions and sectors and over time, this study used a difference-in-difference-in-differences (DDD) model to examine the effects of ETS pilots and differential program design on industry risk and the impacts of risk on future investment horizon. First, we found that the ETS pilots significantly increase profit variability (total risk) in China’s industry; that is, ETS induces greater uncertainty in the covered sectors. In terms of industry heterogeneity, non-electricity sectors (specifically ferrous metal) engage in higher levels of risk taking. Second, the influence of such program features as the allowance allocation (total amounts and approaches), China Certification Emission Reduction (CCER) trading volumes, and penalties are heterogeneous. Finally, during the period around the treatment, industry risk can significantly encourage longer rather than shorter investment. In particular, the punishment mechanism and benchmarking allocation play a positive role in regulating the risk‒investment relationship.

Climate change has caused great pressure on the air transport sector. European airlines are subject to a pioneering CO2 emissions regime. This paper sets out, first, to ascertain whether the European aviation sector has adapted since the launch of the European Union (EU) Emissions Trading Scheme (ETS). Second, based on the answer to the above, we predict the situation of the sector in the medium and long term. The study sample was formed by the top 10 European airlines. The years covered are those since the inclusion of the airline sector in the emissions regime (2012–2019). Clusters were defined by eco-efficiency level using K-means cluster analysis and the Markov model was applied to predict future behaviour. The results have shown, on the one hand, that the larger airlines were the most eco-efficient throughout the study period. On the other hand, companies focused on a low-cost strategy have behaved worse since, although they have also experienced significant improvements in their use of air traffic capacity, even above the large airlines, they have not evolved to a higher level of CO2 emission efficiency and even getting worse in some cases. However, in the medium and long term, our estimate for the sector is a trend towards minimal eco-efficiency in CO2 emissions. As governments continue to increase emission limitation requirements, in order not to jeopardise the sustainability of the aviation sector, it is advisable to encourage investments in the development of biofuels and their supply chain, international agreements to optimise flight routes or projects to improve the energy efficiency of new engines.

Based on the panel data of 30 provinces in China and the SBM-Malmquist-Luenberger model, a comprehensive evaluation of all-factor green energy efficiency in each province is conducted. It is found that the energy structure and all-factor green energy efficiency in southeast China are significantly higher than those in central and western China. On this basis, this paper empirically tests the impact of the pilot policy of emission trading on total factor green energy efficiency in 2008 by using the double difference method. The research shows that the emission trading system can significantly improve the regional total factor green energy efficiency; further research finds that green technological innovation is the main path for the policy to promote green total factor energy efficiency; heterogeneity analysis shows that in the high pollution pilot areas, the emission trading system plays a more significant role in promoting all-factor green energy efficiency and green technology innovation.

PurposeThe awareness for protecting the environment has resulted in remanufacturing and recycling policies in manufacturing industries. Carbon emission is one of the most important elements affecting the environment. Carbon emission due to production and transportation creates complicated situations for the manufacturing firms by affecting the manufacturer's carbon quota. The ecological consequences posed in a reverse logistic model are the subject of this study.Design/methodology/approachThe present study explores the fuzzy model of economic production for both remanufacturing and recycling with uncertain cost parameters under the cap-and-trade rule to control the carbon emission due to different modes of transportation. Due to imprecise cost parameters, the hexagonal fuzzy numbers are set to fuzzify the overall cost, which leads to correct decisions in a more confident way. The result is defuzzified by using graded mean integration.FindingsThis study offers an explicit condition to control the carbon emission of the manufacturer and reduce the optimum cost. The findings indicate that the collection of used goods that can be remanufactured must be increased. The model is validated numerically. Sensitivity analysis explores the various aspects of different parameters on net cost to accomplish the fuzzy production model.Originality/valueUnder fuzzy inference, the research offers a relevant contribution in the field of recycling with controlling carbon emission by using the cap-and-trade policy. This study provides a trading strategy for a manufacturer's decision to avoid losses.

The European Union (EU) aspires to become a global climate power. Climate neutrality became the guiding principle, the goal, and the pillar of the EU’s external policy after the Green Deal endorsement. The Green Deal is internationalized through a system of external policy instruments, including financial, trade and investment mechanisms, carbon border adjustment and emission trading, agreements with other countries, development support, and promotion of the EU’s regulation and standards through cooperation in international institutions. The normative documents and proposals on the key initiatives have been put forward, and the formats and plans for implementation are being discussed and defined. In this context, it is important to analyze the EU’s initiatives for internationalization of green transformation goals and to identify risks and opportunities related to their implementation. This article reviews the array of external policy instruments and initiatives deployed by the EU: the new trade policy of “open strategic autonomy” and the initiative on trade and sustainable development in the World Trade Organization (WTO); the framework for the screening of foreign direct investments and the taxonomy of environmentally sustainable investment and economic activity; new approaches to energy security and the building of global energy markets, including norms and standards for hydrogen markets; and the new neighbourhood policy, including the new strategy for Central Asia and the Neighbourhood, Development and International Cooperation Instrument. Given the initial stage of the initiative’s implementation, the study focuses on the adopted documents and planned actions. The author assesses the potential impact of climate policy internationalization instruments on EU-Russia economic cooperation and on EU leadership in shaping global climate governance. The author asserts that a number of instruments bear risks for the Russian Federation’s economic projects and proposes recommendations for abating them. With regard to global governance, the EU’s commitment to integrate climate goals into the global agenda may serve as a bridge for inclusive governance. At the same time, the EU’s determination to impose its priorities through carrot and stick incentives, including through economic measures, on partners not sharing the EU’s approach may be destructive. The author concludes that the EU’s capacity to build constructive engagement with partners will be a test of the EU’s real leadership. Given that the Green Deal’s external dimension is intended not only to promote EU priorities and values, but also to advance the global public good, controversies arise with regard to the instruments, not the goals. Thus, it is in the interests of Russia, as well as other partners directly affected, not to oppose the export of the EU’s climate policy, but to cooperate to mitigate unintended consequences of its deployment and to shape inclusive global governance.

This paper discusses the impact of cap-and-trade mechanisms, including grandfathering and benchmarking mechanisms, on renewable energy investments and marketing efforts in the electricity market. The current system constructs a two-level electricity supply chain, with a leader's electricity generator and a follower's electricity retailer. Based on the analysis framework of the game theory, the optimal solutions under the grandfathering mechanism and benchmarking mechanism are compared. The results are as follows. First, grandfathering and benchmarking are both conducive to the investment of renewable energy. Further, the benchmarking mechanism is more conducive to investments. Second, benchmarking is beneficial to marketing efforts, while grandfathering is not. Third, the grandfathering mechanism and benchmarking mechanism are conducive to the improvement of market demands. Further, grandfathering produces more total carbon emissions, while benchmarking reduces the total carbon emissions.

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

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

We study the equilibria reached in electricity, natural-gas, and carbon-emission markets, where power producers simultaneously participate in these three markets. We use a conjectural-variations equilibrium model to represent both electricity and natural-gas markets, in which power/natural gas-producers play a quantity game and adjust their production decisions in reaction to the production levels of their rivals. We use a cap-and-trade mechanism to model the carbon-emission market. We develop a direct approach to identify equilibria involving the three markets, in which the optimality conditions of all players and market clearing conditions are gathered and solved jointly. Numerical results from two test systems illustrate the impact of carbon-emission trading and transmission constraints on the equilibria reached. Additionally, we compare equilibrium results under different types of competition.

We investigate the displacement effects of unilateral phase-out-of-coal policies in a stylized two-country model with coal- and gas-fired electricity generation in an international emissions trading scheme. In the basic policy scenario, electricity markets are national and one country bans coal while the emissions cap remains unchanged. The allocative displacement effects are strongly asymmetric: the coal-banning country suffers a welfare loss, the other country is better off, and aggregate welfare declines. Furthermore, the permit price decreases, while the electricity price rises in the unilaterally acting country and declines in the other country. If all countries would phase out coal, the effects would be symmetric and all countries would lose. We then extend the analysis to the cases (i) when the unilateral coal ban is combined with a moderate cut of the emissions cap (as recently suggested in an EU Directive) and (ii) when we allow for international trade in electricity. Compared to the basic unilateral policy, in these cases, the total welfare costs tend to be smaller and some tend to be shifted from the unilaterally acting country to the other one.

Electricity is an indispensable building block for sustainable development. As national and international electrification measures in rural areas of Tanzania are progressing slowly, a solar-powered mini-grid system with second-life battery storage was commissioned on an island in Lake Victoria in 2019 to support local development. This article evaluates the socio-economic impacts associated with electrification through this system. On average, 42.31 kWh of electricity could be provided per day. The daily demand of the main infrastructure (hospital and school) was 18.75 kWh on average. The remaining capacity thus offers enough potential to supply private households and possible economic activities. In order to evaluate the impact of electrification, a qualitative survey was conducted on site 12 months after commissioning, with 7% of the people living there being interviewed. Language barriers as well as intercultural hurdles made the survey difficult and required an adaptation of the on-site implementation. The focus of the survey was on the areas of health, education and economics. The study revealed that the availability of electricity has enormous potential to improve people's living conditions. Initial successes could be seen, especially in the areas of health care and the economic sector. So far, electrification has had no influence on the area of education. While the connections for the main infrastructure have been institutionally supported, the system-related electricity price of €1.30/kWh has proven to be a major obstacle for private households. This is far too high for widespread use compared to incomes. The article thus focuses on the observation that full socio-economic development through electrification can only succeed if local people can afford it. Possibilities to solve this problem are analysed. Since the energy is generated on the basis of renewable resources, the analysis focuses on the use of mechanisms of the emissions trading system (ETS). The aim is to generate revenue through the sale of certified emission reductions (CERs) for the saved CO2emissions and thus reduce the electricity price. A reference scenario of conventional energy production forms the basis for discussion of the effectiveness of the Clean Development Mechanism (CDM) and the Carbon Initiative for Development (Ci-Dev). In addition, the approach of a monthly free quota of electricity, the free basic electricity initiative (FBE), is included in the evaluation.Graphical abstract

In recent years, as a result of the rapid increase in population and industrial development, the need for energy has increased. Many investments are made especially for electrical energy which is an inevitable requirement for the industry. Most of these investments are made by using fossil resources in countries’ lands. Fossil sources are known to be consumable as well as too poisonous gases they give to the atmosphere during energy production. This situation causes global climate change. To prevent climate change, the carbon emitted to the atmosphere has to be brought under a certain control mechanism. In this context, the first Kyoto Protocol and then Paris Climate Agreement was signed. Under these agreements, countries will be responsible for the level of their greenhouse gases in the atmosphere. This situation led to the carbon trade among countries. This situation accelerated the transition of countries from fossil sources to renewable energy sources. In this study, the effect of hydroelectric power plants, one of the renewable energy sources, on carbon emissions was investigated. According to the results, based on fossil sources of 408,533.57 tCO2 per year from Turkey Gokcekaya dam has been shown to reduce the carbon footprint.

One of the biggest challenges facing the tourism industry is carbon dioxide emissions resulting from the greenhouse gases emitted from aviation indispensable for tourism. Thus, governments have introduced emission permits trading to the aviation industry. However, as this is in the introductory stages, it is unclear how this environmental policy will influence tourism and the environment and whether the policy can contribute to the decarbonisation of the aviation industry. Using an R&D-based growth model considering aviation for tourism, this study investigates how introducing emissions permit trading in aviation influences tourism-led growth and sustainable tourism. Domestic tourism aviation, and not international tourism aviation, was considered because it is estimated that the former short-distance aviation movements emit more greenhouse gases than the latter. The findings demonstrate that fewer permits lead to sustainable tourism despite a generous permit allocation for the manufacturing sector if the goal of tourism-led growth is excluded. This is because the policy improves environmental quality and results in a trade-off between tourism consumption and the economic growth rate. For a generous permit allocation in aviation, the policy leads to decreased tourism consumption and pollution-intensive aviation. These findings imply that emissions permit trading between the aviation and manufacturing sectors inhibits the compatibility of tourism-led growth and sustainable tourism. Finally, this study suggests that sustainable tourism could be realised when manufacturing countries such as Germany and the UK increase aviation permits, while tourism countries such as Spain and Italy decrease aviation permits.

Environmental policy in the European Union is a hot topic for both practitioners and researchers. Their interests are attracted mainly by the main tool of this policy—emissions trading within the E...

This paper studies a cooperating mode selection problem of a manufacturer who sells its products through an offline channel and an online platform under cap-and-trade regulation. The platform can operate with marketplace or reselling mode. We investigate the manufacturer's optimal operational decisions and selection of the platform's modes considering demand disruptions. First, when the carbon cap decreases in the application process, this regulation is firstly easy and then hard to be implemented if the cross-channel effect is small. Even though the platform increases its commission rate, greater cross-channel effect can still bring more production. Second, the increase of demand disruptions brings more profits for the manufacturer and the platform. Specifically, considering demand disruptions, the total profit with reselling mode in decentralised case is larger than that in centralised case under some situations. Third, without demand disruptions, the manufacturer prefers marketplace mode (reselling mode) if the commission rate is low (high). However, demand disruptions make the manufacturer's mode selection a little complicated. Lastly, without demand disruptions, the two firms can be coordinated with reselling mode but cannot be coordinated with marketplace mode. With demand disruptions, the two firms can be coordinated with the two modes in some situations.

The purpose of this study is to test whether Korea’s emission trading scheme (KETS) was effective in curbing GHG emissions in the three major emitting sectors during the first commitment period (2015–2017). The merged dataset, which contains GHG emissions, the amount of free allowances, fuel use and sales at the firm level, and market price information for fuels and Korea’s allowance units (KAU), was used for the empirical exercise in this paper. Our research show that the adoption of the KETS was effective in improving the carbon intensity of KETS-regulated entities in the manufacturing and building sectors, but not in the power sector. The reduction burden, defined as the proportion of the expected emission level to the amount of free allowances allocated before the complying year starts, was shown to be critical in altering CO2 emission characteristics of covered entities in the manufacturing and building sectors. This paper’s empirical findings also suggest that the development of a pricing scheme reflects carbon costs in electricity prices, In addition to the stringency in free allowances allocated to large emitters, is necessary to mitigate CO2 emissions in the power sector.

Air transportation is contributing to economic prosperity, facilitating growth particularly in developing countries. The main objective of the paper is to give an overview of the fundamentals of environmental regulation of the aviation industry and provide a comprehensive analysis of the European Union Emissions Trading Scheme (EU ETS). A functional comparative analysis of the existing environmental regulations and policies in the aviation industry with reference to welfare economics literature review provides a more solid understanding of the policy differences in terms of objectives, efficiency and enforcement measures.

To cope with the ever-increasing environmental regulations, high-emitting countries have established strategies to reduce greenhouse gases. Among these methods, the emission trading scheme (ETS) ha...

This study provides evidence on the probability of adopting an accounting approach for emission allowances and greenhouse gas emissions as a function of each company's GHG emissions performance. The different accounting treatments adopted by national standard-setters and the lack of specific guidance from the International Accounting Standard Board (IASB) allow identification of the use of multiple accounting approaches. Based on a sample of 85 companies registered with the Portuguese, Spanish, and French National Plans of Allocation, data collected from the annual reports were analysed for the period 2008-2014. The results suggest that the probability of adopting omission strategies is positively associated with better GHG emissions performances. It addresses the importance of introducing the transactions of the European Union Emissions Trading Scheme (EU ETS) in financial reporting as the visibility of the costs of polluting is one of the purposes of the market mechanism.

Emission trading gives rise to a new financial tool, namely the emission right-based lending, under which a firm could pledge its emission right to borrow from the bank. Early practices show that this emerging financing mode can benefit both the emission right-holding companies and the banks. The firm gets more money for further investment or more green production, and the bank increases its interest income. To promote the application of emission right-based lending and enrich the research field of green finance, this research theoretically investigates its operational mechanisms, benefits and limitations through the construction of the firm’s decision model under this green financing mode. Our model goes deeper into the complicated interactions between variables and parameters and innovatively captures a key property of this financing mode. The numerical solution is not hard to obtain though it is infeasible to solve the model analytically. In addition, we conduct a group of numerical experiments on the theoretical model to explore how the emission right-based lending brings profit to the firm and the bank, and how it enhances sustainability. Results from the numerical analysis show that the new financial tool enjoys significant advantages in meeting the two goals. And several interesting effects of factors on the advantages are revealed, providing managerial insights regarding environment protection and sustainable development.

‘Circular economy‘ in agriculture centres on the production of agricultural commodities using a minimal amount of external inputs, closing nutrient loops and reducing negative discharges to the environment (in the form of wastes and emissions). This can be achieved through the (re)design of maintenance, repair, reuse, remanufacturing, refurbishing, and recycling. Under the principles of CE, products and materials approaching their end-of-life stage can be regenerated or restored or replaced. Circular agriculture is aimed at closing the loop of materials and substances, and reducing both resource use and discharges into the environment. New measures like environmental taxes, insurance for liability resulting from environmental damage, cap and trade system and environmental labelling can be explored to promote transition of a current linear model to a circular one. The circular economy in Nepal is in infant stage and there is plenty of works to be done in this sector. The results of the paper will be instrumental for the transition of Nepalese agricultural sector to a more circular one.

The power industry’s participation in carbon trading and green certificate trading is an effective market-based approach to solve the negative externalities of power production. In this paper, the Virtual power plant (VPP) is taken as the aggregator to coordinate and optimize the carbon trading and green certificate trading between the power purchasing end and the power selling end, so as to achieve the goal of maximizing the comprehensive benefits of the VPP. Firstly, the operation model of VPP aggregating various types of distributed energy and different users participating in green certificate market and carbon trading market is analyzed; Secondly, a two-level collaborative optimization model of VPP participating in power purchase and sale transaction and green certificate transaction is constructed. On the one hand, the cost of power purchase and green certificate acquisition is minimized by combining various types of power generation resources at the power purchase end. On the other hand, the power purchased is distributed among various types of users at the power sale end, so as to maximize the power sale income and green certificate sales income. On this basis, the VPP as a whole participates in the electric energy market, carbon trading market and green certificate trading market to maximize the comprehensive income. Finally, a VPP is taken as an example to verify the economy and effectiveness of the proposed model in this paper.

The article analyses the process of coal crowding out of the world energy balance. In developed countries, the tendency towards the rejection of using energy coal accelerated in the end of 2000s under the pressure of climatic considerations. The global COVID‑19 pandemic has led to the acceleration of the world energy balance restructuring at the expense of lowering demand for coal. Coal is crowded out from energy consumption for both climatic considerations as well as because of the strong harmful effect of coal power plants emissions on health. Developed and an increasing number of developing countries strengthen and expand complex of measures aimed at coal energy displacement: emissions trading systems and direct emissions tax, Coal Plant Directive and closures of coal mines. Decarbonisation has been accelerated after Pittsburgh Summit (2009) and Paris Agreement (2015). By 2020, developed countries have largely abandoned direct subsidies for coal consumption, and all major international development banks have limited their involvement in coal-fired generation and have stopped considering coal mining projects. Developing countries continue support coal consumption and production in order to maintain economic growth and employment. Excessive supply will lead to overstocking of the coal market, lower prices and slowdown of the decline in coal consumption after COVID‑19. Although several largest economies in the Asian-Pacific Region, primarily China, India and Indonesia, continue to increase coal generation capacities (HELE plants), the analysis in the article shows that after the accomplishment of the recovery growth in the world economy by 2025, global demand for energy coal will start to steadily decline. China announced plans to curtail coal use after 2025, G‑7 decided to stop financing coal projects. Meantime many developing countries with low level of income and modest financial capacities cannot afford to quit comparatively cheap coal quickly as a factor supporting economic growth. Increasing High-Efficiency, Low-Emissions coal plants demand is rapidly rising requirements to coal quality.

Received 28.12.2020. The article examines the comparative influence of the Council of the European Union and the European Parliament in the ordinary legislative procedure using the example of the EU Emissions Trading System (ETS) reform. The study was carried out on the basis of a process tracing method. Primary data includes documents reflecting positions of the actors (summary of consultations, position papers, statements) and the progress of the legislative process (Commission proposal, EP amendments, discussions in the Council, final text of the directive). In total, 21 important elements of the reform were analysed, on which the positions of the European Parliament and the Council diverged significantly. The following conclusions are made. 1) The case study provides a relevant example of the consensual nature of the EU decision-making. 2) The case study confirms that the essence of the legislative process in the EU is not a confrontation, but an faithful cooperation of both co-legislators. 3) The Commission and both co-legislators were significantly limited by the decision of the European Council, which fixed most of the basic parameters of the ETS phase IV. This corresponds to the trend of new intergovernmentalism. 4) The study of comparative influence of both co-legislators on the final text of the directive demonstrates that the member states played a decisive role in the ETS reform, and the final provisions of the directive reflect primarily the balance of interests and influence in the Council. The study shows how the interests of certain groups of the EU member states, in particular of CEE countries, were taken into account. The influence of the European Parliament on the legislative process is greater than that of individual countries, even the biggest ones, but it is no more than a quarter of the influence of the Council as an actor. 5) The study identifies a number of factors that enable the European Parliament to uphold its position more effectively. Acknowledgments. The article has been supported by the Institute of International Studies of the MGIMO-University. Project No. 2022-02-01.

This paper studies the pricing and recycling decision problems in a closed-loop supply chain (CLSC) containing a manufacturer, a downstream retailer, and a third-party recycling left. The manufacturer is subjected to the cap-and-trade regulation and determines the wholesale price of products and carbon emission reduction rate. The retailer determines its resale price to meet customer demands. The third-party recycling left determines the collection rate of recycling and remanufacturing used products. The new product demands, total carbon emissions, and recovery of these products are characterized as uncertain variables due to lack of historical data or insufficient data collected for research. By constructing three decentralized game models, we explore the equilibrium solutions under the corresponding decision-making situation and the corresponding analytical solutions. Finally, numerical experiments are performed to show the total profit of supply chain members for each structure and some special insights are drawn.

Companies are responding to the effects of climate change by reducing CO2 emissions as a way of managing stakeholder interests and complying with legal and regulatory requirements. In Europe, the emissions trading system is consolidated as a limiting market and control scheme to support business climate change management through a collaborative relationship between government and industry. This work focuses on the economic accounting field, analysing carbon management accounting and its impact on financial performance in scenarios attached to that trading system. The methodological approach used is quantitative, empirically testing the hypotheses through a multiple regression analysis with a sample of 350 European companies. The results attest to the importance of carbon management accounting (CMA) control and its effects on financial performance. Compared with European emission trading, the results failed to display significant differences in the relationship studied between those that make up this type of market and those that do not.

The allocation of carbon emission rights via auctioning has gradually become an irreplaceable part of the emissions trading system. However, the efficiency of allocations suffers due to low and volatile auction-clearing prices, which cannot account for price discovery. Furthermore, the fixed cap lacks flexibility in emission trading systems. Therefore, this study proposes a multi-round auction model with a floating cap for carbon allocation, integrating firms’ bidding strategies during the auction cycle and the impact of governmental regulations. The results show that (1) compared with static auctions, multi-round auctions can achieve a higher and more stable clearing price. (2) The mechanism provides flexibility for the distribution of profits and may encourage firms to participate in auctions. (3) Among all factors, the total supply of carbon emission permits and the economic environment more significantly influence the mechanism.

As China’s national carbon emissions trading system (ETS) is counting down to establishment, experience and lessons from pilot ETSs are of great value, which come from assessment of the implementation effectiveness, especially how the covered entities are affected. To understand how well the pilot ETSs have operated and how entities behave, the research conducted two questionnaire surveys among covered entities in the pilot ETSs in 2015 and 2018. The surveys investigate how strictly rules have been enforced for monitoring, reporting and verification (MRV) and compliance. Inquiries are also made about the pressure imposed by ETSs and the abatement actions that covered entities have taken in consequence. The results show that (1) while compliance procedures and measures have become routine, further improvement is required regarding enforcement of MRV rules in certain pilots; (2) the free allowance allocation methods tend to be tightened though the allocation results at present are much likely to be “approximately balanced”; (3) almost all of the entities surveyed have developed emission abatement strategies with a significant improvement compared to the survey in 2015, but nearly half of the entities have no explicit emission reduction targets along with limited perception of marginal abatement costs; and (4) compliance remains the dominant driver for entities to participate in emissions trading, while strategies are emerging to gain profits from emissions trading by enhancing carbon asset management capacity.

The pilot emission trading schemes in China have driven a new wave of local collaborations among state and non-state actors. Strong networks have been formed to support capacity development, potent...

PurposeThis study aims to understand the organisational benefits of carbon-focussed management control systems (carbon MCS) under a regulatory context.Design/methodology/approachThe authors conduct a survey of 85 New Zealand (NZ) organisations covering different industries, sizes and compliance obligations.FindingsThe results suggest a significant direct positive impact of carbon MCS on organisations’ non-financial benefits and an indirect impact on financial benefits via non-financial benefits. The impact on non-financial benefits is strongest when a whole carbon MCS package is used rather than individual carbon controls. However, the highest impact on financial benefits are attained when only diagnostic controls are used rather than other controls or the whole MCS package. Firms in primary, manufacturing and energy sectors and those with export activities are less likely to achieve organisational benefits, while those with a compliance obligation under the emissions trading scheme are more likely to perceive such benefits.Research limitations/implicationsThe study has a limited sample size (85 firms), a unique context (NZ) and coves only large firms. Further, there are no objective performance measures to validate survey responses regarding organisational benefits.Practical implicationsThe findings provide a business case for managers and practitioners in formulating their strategic and MCS responses to climate change issues.Originality/valueThe authors focus on carbon MCS and adopt a wider range of carbon MCS levers than previous research. The authors discern not only non-financial benefits but also financial benefits from MCS use.

Carbon financing policies such as emission trading have been used to assist in emission mitigation worldwide. As energy end-users/consumers are the underlying driver of emissions, it would be difficult to effectively mitigate carbon emissions by creating an emission trading market without active end-users’ involvement. In electricity markets, demand side management (DSM) in the smart grid can manage demands in response to power supply conditions and influence end-users to contribute to improving both network efficiency and economic efficiency. However, it is a relatively new topic to study the environmental benefits of DSM. This paper proposes a two-stage scheduling model to comprehensively investigate the environmental benefits of consumers participating in both electricity and carbon emission trading markets through active DSM. A developed zero sum gains-data envelopment analysis (ZSG-DEA) model based multi-criteria allocation scheme for emission allocation is employed. Meanwhile, the carbon emission flow model (CEF) is applied to track the “virtual” carbon flow accompanying power flow. According to case studies on the IEEE 24-bus system and IEEE 118-bus system, the proposed model can effectively achieve carbon emission mitigation and provide consumers extra environmental benefits in some scenarios. This model can be an important guide for governments to establish emission trading schemes.

We study the determinants of aviation CO2 emissions by designing an econometric model applied to a panel data set covering all flights departing from Lombardy, Italy over the 1997–2011 period. We consider two dimensions of CO2 emissions: total and per available seat kilometer. The latter is a measure of emission efficiency. We focus on different categories of determinants: technical progress; aircraft and network carrier management; policy/business decisions that may not be oriented to limiting CO2, but may indirectly affect it by offsetting projected outcomes of policies adopted to reduce emissions (e.g., the EU Emission Trading Scheme (ETS) or the ICAO Carbon Offsetting and Reduction Scheme for International Aviation); and others. We find that although aircraft size increases total emissions, it reduces emissions per available seat kilometers (ASK), while the route distance increases total emissions and decreases emissions per ASK, implying that CO2 is less of a problem for long-haul connections. Technical progress decreases CO2 emissions per ASK with an estimated elasticity equal to −0.06%. Last, liberalization in the EU market has generated the development of low-cost carriers, which in turn have lowered CO2 emission per ASK, that is, liberalization in Europe has brought the collateral effect of reducing the CO2 externality per passenger.

Global warming is one of the most alarming phenomena facing our planet today. There is a consensus among scientists that human-induced greenhouse gases (GHGs) should be regulated to slow down the heating of the Earth’s oceans and atmosphere. Energy consumption and CO2 emissions are continuously increasing in different countries, especially developing ones such as India, whose emerging economy and rapid economic development has caught the attention of the world. CO2 emission trading is executed by the various developed countries to alleviate the affect of GHG emissions. In this work, an optimal bidding strategy for a supplier has been developed, considering rival’s bidding behavior, in an hourly day-ahead pool market. Bidding problem has been formulated as a bi-level multi objective optimization problem (BLMOOP), where in the first level generator submit bid strategically to the ISO and in the next level a particle swarm optimization (PSO) approach has been employed for the maximization of social welfare with risk management. It is assumed that each generator should submit bid in sealed auction based on pay-as-bid MCP (market clearing price) mechanism with knowing the rival’s bidding behavior. The practicability of proposed optimization method is examined by an IEEE-30 bus system which consists of six suppliers.

International trade plays crucial roles in the evolution of carbon emissions given the prevalence of complex global supply chains. Production reallocation across countries promotes the cross-border trade of emission-embodied products and is closely related to emission transfer or carbon trade balance, which is defined as the difference between territorial and consumption emissions. One important issue addressed in this study is how carbon trade balances relate to carbon emissions under a globalized world with fragmented production. By applying a panel-pooled mean group-autoregressive distributive lag (PMG-ARDL) model, we evaluate the long-run relevance between carbon emissions and carbon trade balances while considering the short-run dynamics over 58 countries during the period of 1990–2014. The main results reveal a positive relationship between carbon trade balances and carbon emissions for high-income countries but no clear evidence for low-income countries. Our analysis argues that a high-income country may achieve emission reduction not only by displacing production units to trading partners but also by transferring high emission-intensive production units to trading partners and by keeping low emission-intensive domestic production units. Our results provide some important implications about emissions embodied in trade and emission transfers via international trade. First, high-income countries, particularly emission importers, should have the greater responsibility for global emission issues and should continue to develop and improve energy-saving and less emission-intensive technology. Second and more importantly, high-income countries should promote spillovers of advanced green technology to trading partners when they outsource emission-intensive production units to low-income countries.

In this paper, a mixed-integer linear programming model is discussed to provide joint decision making for facility location and production–distribution across countries for both forward and reverse logistics. A hybrid facility network is considered for cost-cutting and equipment sharing where the facilities of forward logistics are also equipped to provide reverse logistics services. The model considers the dynamic production and storage capacity of the facilities which can be expanded if required. Furthermore, the effectiveness of the model is tested to deal with disruptions due to man-made or natural disasters. The dynamic facility allocation enables the model to withstand the demand/supply disruptions in a disaster-affected zone. Besides this, the model considers carbon emissions caused due to manufacturing, remanufacturing, repair, storage and transportation. These emissions are regulated using cap and trade policy Thus, the proposed model balances resilience and sustainability under uncertain market demand and product returns. The chance-constrained approach is used to obtain the deterministic equivalence of the stochastic demand and returns. The paper also investigates the changes in emission and production level in each country under demand and supply disruptions. The parameters of the model are mapped with the various dimensions of big data such as volume, velocity and variety. The proposed model is solved using randomly generated data sets having realistic parameters with essential big data characteristics.

This paper investigates the impacts of the Target-Setting Emissions Trading (TSET) Program launched by Saitama Prefecture in Japan in 2011 on the adoption of low-carbon technology. Using facility-level data on the manufacturing sector, the causal relationship between implementation of the program and investment in high-efficiency equipment is estimated. The results show that the TSET Program promoted the adoption of high-efficiency machines and devices for the first three years of the second compliance period, whereas the program did not spur investments in high-efficiency equipment during the first compliance period. These results suggest that the manufacturing facilities may have adopted relatively cheaper emissions reduction plans in the first compliance period such as improvements to equipment they already owned, whereas in the second compliance period, when the emissions targets became stricter, they allocated money and resources to introduce high-efficiency equipment. These findings indicate that the TSET Program succeeded in encouraging emissions reduction efforts by facilities in the manufacturing sector covered by the scheme, even though the program lacks penalties for noncompliance.

Considering the importance of waste sorting and treatment in the development of an ecological civilization, empirically evaluating the environmental impact of such programs is particularly important. This study uses Xiao'er Township in Gong County, Sichuan Province, China as a case study to analyze and estimate the carbon emission reduction effects of the township's pilot waste sorting program. Using the five-point sampling method, samples of waste are collected, reviewed, and measured for their major components and other key indicators. Additionally, questionnaire surveys and interviews are conducted in the township, along with investigations into existing records and other relevant information. The study adopts the solid waste management-greenhouse gas (SWM-GHG) calculator to study the township data. The case study results imply that proper waste sorting and treatment methods in villages and townships could play a major role in the reduction of carbon emission. Specifically, after implementing waste sorting in Xiao'er, annual carbon emissions were reduced by 2081 tons—equivalent to the electricity consumption of a family of three people for 1718 years, or the amount of CO2 emitted by 264 1.6L vehicles driving once around the Earth. In the optimal scenario simulation, increasing the recycling of wet waste and recyclable waste further, the level of carbon emission reduction in Xiao'er could reach up to 4482 tons per year. According to the international general carbon trade price, this is equivalent to adding 44,820 US dollars to the GDP, or to an annual saving of 5.71 million kWh. If these waste management methods are expanded to villages and townships across China, then the carbon emissions reduced in a year would be equal to the CO2 emitted from electricity generation in Beijing for over a year. Based on these findings, this paper provides three policy recommendations for effective carbon emission reduction: increasing residents' environmental protection awareness over the long term, boosting funding support and enhancing the construction of supporting facilities, and strengthening governance and institutional capacity for waste sorting and treatment.

Financial regulators are challenged to respond to the innovation opportunities presented by financial technology (fintech). Current rules are not necessarily sufficient or effective to adequately regulate new business models and new products relating to innovations such as crypto assets or digital financial services. Regulators that fail to respond in a timely manner may drive innovation offshore and deprive their markets and consumers of appropriate, new services. To respond to new financial innovation, regulators have been establishing innovation hubs and regulatory sandboxes. Innovation hubs enable them to engage innovators more effectively. Sandboxes allow the products to be tested in a controlled environment and enable to regulator to consider whether existing laws are appropriate to regulate such products and, of not, what measures may be required. Sandboxes are however resource intensive and they hold a number of risks. Financial regulators are, of course, not alone in having to address the regulatory challenges of innovation. This article therefore also considers other non-financial regulatory experiences of innovative products and services, namely automated vehicles; emissions trading in China; and Uber and its clones, to consider whether those experiences hold lessons for financial regulators.

Carbon pricing has been the most prominent climate change mitigation policy for the EU since the launch of its emissions trading system (ETS) in 2005. Since then, the context of international climate policy as well as of the socio-political and economical context of decarbonisation has changed considerably. The 2015 Paris Agreement engages virtually every country unlike its predecessor, while non-carbon pricing policies have led to rapid cost reductions in renewables, even if other sectors (particularly in energy-intensive industry) have not seen similar developments. This paper examines how the role of carbon pricing in the EU climate policy mix has evolved from its beginnings as a means to help achieve modest targets under the Kyoto Protocol, to a policy instrument increasingly augmented by a wider policy mix aimed at reaching no net emissions of greenhouse gases by mid-century.

Since the low-carbon technology fusion energy is scheduled to be commercialized beyond 2050, the late-mover needs to flexibly and strategically operate for sustainable cash flow responding to the future market mechanism. Carbon sequestration of the fusion–biomass hybrid system by using low-temperature heat is proposed under the two preconditions: the establishment of the deregulated electricity market, and the emission trading market. When the price is above the breakeven price, the hybrid system generates electricity; otherwise, charcoal production is performed. Charcoal production is a stable solid form of carbon capture, and can possibly be traded on the emission credit market to secure profit. The experimental result shows that it is possible to produce charcoal at low temperature of 280 °C, indicating that any type of blanket design is applicable in the hybrid system concept. The carbon sequestration cost is 39 $/tCO2 at the default parameter of net electric output of 4000 $/kWe for the fusion power plant, and 60% of charcoal yield from experimental result. Comparison between the hybrid system and the fusion power plant proves that the fusion–biomass hybrid system prevents further loss, by setting two-track income structures in the various market mechanisms.

The price of permits in the European Union Emissions Trading System (EU ETS) has historically been highly sensitive and prone to jumps. We consider different stochastic processes to model the price of permits, and show that the Variance Gamma (VG) model provides the best fit for the price distribution, among a selection of infinite activity processes. Using this result as a starting point, we assess the effects of the EU ETS in delivering low-carbon investments at the firm level, by modeling a price taker electricity producer subject to the EU ETS jurisdiction. We compute, via Least Squares Monte Carlo, the value of the real option the greenhouse gas emitter has, consisting in the opportunity to switch from its current high-carbon technology to a cleaner one. We use a VG specification for carbon prices, and a mean-reverting (Brennan-Schwartz) process for the price of fuel. Moreover, we further analyze the investment decision problem, in case of a CO 2 price stabilization mechanism in the form of a price floor, by explicitly computing the expected value of the investment project by means of Fourier methods. Our results show that the introduction of the price stabilization mechanism significantly affects the timing of the investment decision, and supports emission-related investments.

There is growing international interest in better managing soils to increase soil organic carbon (SOC) content to contribute to climate change mitigation, to enhance resilience to climate change and to underpin food security, through initiatives such as international ‘4p1000’ initiative and the FAO's Global assessment of SOC sequestration potential (GSOCseq) programme. Since SOC content of soils cannot be easily measured, a key barrier to implementing programmes to increase SOC at large scale, is the need for credible and reliable measurement/monitoring, reporting and verification (MRV) platforms, both for national reporting and for emissions trading. Without such platforms, investments could be considered risky. In this paper, we review methods and challenges of measuring SOC change directly in soils, before examining some recent novel developments that show promise for quantifying SOC. We describe how repeat soil surveys are used to estimate changes in SOC over time, and how long‐term experiments and space‐for‐time substitution sites can serve as sources of knowledge and can be used to test models, and as potential benchmark sites in global frameworks to estimate SOC change. We briefly consider models that can be used to simulate and project change in SOC and examine the MRV platforms for SOC change already in use in various countries/regions. In the final section, we bring together the various components described in this review, to describe a new vision for a global framework for MRV of SOC change, to support national and international initiatives seeking to effect change in the way we manage our soils., Since soil organic carbon (SOC) changes are difficult to measure, a key barrier to implementing programmes to increase SOC is the need for credible and reliable measurement/monitoring, reporting and verification (MRV) platforms. We review methods for measuring SOC change directly in soils, examine novel developments for quantifying SOC change and describe how surveys, long‐term experiments and chronosequences can be used for testing models and as benchmark sites in global frameworks to estimate SOC change. We review MRV platforms for soil organic carbon change already in use and describe a new vision for a global framework for MRV of SOC change.

Australian climate change policy has been applied haphazardly to Australia’s electricity markets for almost two decades. Federal and state level emissions trading frameworks have been introduced and subsequently repealed. Several studies have pointed to the significant costs imposed by such policy discontinuity. This article demonstrates that the use of production subsidies has also resulted in a ‘disorderly’ transition and has broken the link between the financial incentives for decarbonisation activities and the physical needs of the electricity system. We evaluate the various options for correcting this by introducing a stable, long-term climate change policy that integrates efficiently with electricity policy objectives. By applying a broad assessment framework, we are able to establish that a market mechanism aimed at pricing the externality implied by an independently set carbon budget is the most efficient policy response.

The availability of green electricity, changes to the Emission Trading Scheme (ETS) system and technological breakthroughs will determine how the steel industry will evolve in the coming decades. The blast furnace (BF) technology will continue to dominate steel production in the coming decade and the only way to substantially reduce the associated CO2 emissions is to combine it with Carbon Capture and Utilization (CCU) and/or Carbon Capture and Storage (CCS). CCU options that do not require a lot of hydrogen and with high added value are logical step stones towards production of bulk chemicals and even fuels such as oxymethylene ethers. BF waste gas recycling and conversion will require a multisectoral approach creating new dependencies between the steel, energy, and chemical sectors. Energy efficient, cheap and CO2 free hydrogen production using green electricity is the ultimate solution to drive this transition. This hydrogen could on the long term also open the door to replace blast furnaces by hydrogen-based steel making. However, today it makes economically more sense to use thermally produced hydrogen by (bio)methane pyrolysis or steam reforming, potentially electrified and intensified, rather than from water electrolysis. Having novel and existing elements from the chemical engineers' toolbox such as artificial intelligence, catalysis and reaction engineering, process intensification principles and multiscale modeling and design, should bring these emerging technologies within reach by the end of the next decade.

In theory, by establishing a price for greenhouse gas (GHG) emissions, an Emissions Trading System (ETS) promises to encourage a shift away from carbon-intensive electricity supply. It is g...

Knowledge-based experts contribute to climate change policy change. However, the issue of how the role, membership, and structure of expert networks change over a policy cycle remains poorly explained, undermining the case for recognizing a dynamic and inclusive evidence base containing power. This article traces the development of a Chinese emission trading scheme and analyses the changing conditions for knowledge production, acquisition and delivery to shed light on governance. In-depth interviews with 62 experts and other actors were conducted and analyzed using a framework comprising three policy sub-processes, three drivers of change, and five groups of actors. Between 2012 and 2017, the emission trading scheme experienced three stages of development. The initial planning process utilized strategic, system-level inputs from elite experts, learning from applied research and international experience. Emerging priorities arising from policy implementation and diffusion strengthened the role of those who are well versed in the practice and/or industry and enabled broad-base participation. The study enhances our understanding of expert involvement as a continuous, dynamic, and adaptive process amenable to the developmental needs of policy. Findings can inform discussions on the implications of shifting policy priorities and needs for knowledge-producing organizations and for broadening the evidence base of policy.

This paper investigates the volatility spillover effects and dynamic correlations between China’s emissions allowances and fossil energy markets by employing the dynamic conditional correlation (DCC) generalized autoregressive conditional heteroscedasticity (GARCH) model. Thermal coal futures, South Sea crude oil and liquefied natural gas markets confirm short-term and long-term persistence on the Beijing, Shanghai, Guangdong and Shenzhen emissions allowances pilots, while those fossil energy markets demonstrate long-term persistence on Hubei’s emissions allowances pilot. The dynamic correlations between fossil energy and regional emissions allowance markets exhibit slight time-varying trends, and their dynamic correlations are at lower levels in the period considered. The prohibition of cross-region emissions allowance flow, inefficient dynamic linkage and poor price pass-through between the two markets may result in lower volatility spillover effects and dynamic correlations.

The global shipping industry contributes a significant part of global greenhouse gas (GHG) and atmospheric pollutant emissions, which would cause serious problems to environment and residents’ health in coastal areas. Shore Side Electricity (SSE) is an efficient energy means for CO2 emission reduction worldwide. However, enormous initial investment, high electricity sale price and charging caused delays set the barriers for the implementation of SSE. This paper proposes a framework for assessing the economic feasibility of SSE investment considering environmental and techno-economic factors. Besides, carbon trading is also integrated in this framework to improve the profitability of SSE investment. Finally, the Port of Shanghai is selected for case study, and 3 scenarios are designed to investigate the economic viability. Results indicate that the income of reduced CO2 emission trading only contributes a little to the overall income, and the port needs to make profits through electricity sale in order to avoid great financial losses. Besides, a more radical investment plan could have better financial performance and more CO2 emission reduction for the port. The conclusions can facilitate policy makers to make SSE promotion policies, that providing subsidies on electricity price may be more useful than just financing the facilities’ implementation.

A policy change in the European Union's Emissions Trading Scheme (EU ETS) provides us with a unique opportunity to measure the impact of carbon pricing on aviation, the most climate-intensive mode of transport. We implement a difference-in-differences strategy on a sample based on all flights within Europe from 2010 to 2016 to examine the causal impact of the EU ETS on emissions and supply. We find that the EU ETS reduced emissions by 4.7% in the regulated routes relative to the counterfactual. When we restrict the sample to short-haul flights, routes on which competition from other means of transport may exist (less than 1,000 km), the reduction in emissions is 10.7%. Finally, the reduction in emissions is also high for low-cost airlines (−11%) but it is not statistically significant for network airlines. In sum, the EU ETS has helped to mitigate emission growth by 3 Mt CO2 per year during the period analyzed, but not to reduce absolute emissions in the sector, as needed.

Tropical land-use change for agricultural expansion is the primary driver of global biodiversity decline. Efforts to stem this decline often focus on protecting pristine habitats or returning farmland to forest, yet such approaches fail to protect vulnerable taxa reliant on habitats within low-intensity farmland. We assess the economic viability of carbon-based payments for ecosystem services (PES) to protect farmland trees and fallowing in Ghana, which provide vital wintering sites for imperiled Afro-palearctic migrant birds and enhance landscape-level carbon storage. We estimate the carbon breakeven prices associated with alternative agricultural management scenarios that protect existing farmland trees. Breakeven prices associated with tree protection on existing farmland were very low, ranging from US$2.49 – US$6.45 t-1 CO2. Extending and reintroducing fallow periods also carried competitive breakeven prices, US$4.67 – US$15.45 t-1 CO2, when combined with the protection of 50 trees per hectare. Accounting for leakage and economic uncertainty increased breakeven prices considerably, but scenarios protecting farmland trees and extending fallow periods remained below EU Emissions Trading Scheme (ETS) prices. Protecting low-intensity farmland habitats and associated biodiversity is cost-effective under carbon-based PES. Implementation should be combined with efforts to close yield gaps, providing greater local food security and resilience.