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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]

To address the growing demand for green development, governments worldwide have introduced policies to promote a green economy. Among these policies, the carbon cap-and-trade mechanism is adopted as an effective approach to control carbon emissions. Additionally, blockchain may increase transparency in the industrial process. Despite focusing on improving its own green standards, the supply chain needs to establish stable cooperative relationship. Thus, we focus on a supply chain consisting of a dominant manufacturer and a retailer, where the manufacturer opts for implementing blockchain and the retailer selects their stance on fairness. We construct a Stackelberg game model and use backward induction to obtain the equilibrium solutions. In the supply chain, the highest profits can be achieved when the manufacturer adopts blockchain technology, provided that the cost of application is relatively low. For manufacturer and retailer, when the cost of applying blockchain is relatively low, they can both obtain maximized profits without applying blockchain and the retailer does not have fairness concerns. However, as the cost of inducing blockchain and the product's reduction in carbon emission increase, the optimal strategies for manufacturer and retailer begin to diverge, which may affect the stability of the supply chain. [ABSTRACT FROM AUTHOR]

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

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]

As a voluntary individual carbon trading mechanism, the carbon generalized system of preferences (CGSP) aims to promote individuals' active practice of low-carbon behaviors through the incentive model of 'who reduces emissions, who benefits from the practice.' It is an extension and expansion of the carbon emission trading mechanism to the individual level, and it is of great significance to evaluate the carbon emission performance of this policy to tap the emission reduction potential of individual society and enrich the environmental policy tool system. Based on the quasi-natural experiment of the implementation of the CGSP in Guangdong Province in 2015, this paper empirically evaluated the policy effect of the CGSP in improving regional carbon emission performance by using the synthetic control method and provincial panel data from 2005 to 2021 and further explored the mechanism of the policy effect. The results showed that the implementation of the CGSP was conducive to improving regional carbon emission performance and promoting the reduction of regional total carbon emissions, per capita carbon emissions, and carbon emission intensity. In the seven years from 2015 to 2021, the policy intervention reduced the total carbon emissions of Guangdong Province by an average of 40.94 million tons, per capita carbon emissions by 0.294 tons, and carbon emission intensity by 0.312 tons/10 000 yuan. This conclusion was still valid after the placebo test, ranking test, and test excluding other policy interferences. Further intermediary tests showed that the CGSP acted on regional carbon emissions through two intermediary pathways: promoting public green travel and reducing electricity consumption. But the mediating path with energy consumption as the mediating variable did not hold. The study reveals the effectiveness of both incentivized and voluntary individual carbon trading mechanisms in environmental governance and makes the following policy recommendations: ① We should pay attention to the emission reduction potential of social individuals on the consumer side, gradually incorporate individual carbon trading mechanisms into carbon emission reduction governance, and encourage local governments to apply and develop the CGSP according to local conditions. ② In the design of CGSP, it is necessary to improve the incentive mechanism in low-carbon travel scenarios and low-carbon life scenarios and improve the convenience of public participation in emission reduction. ③ It is necessary to develop a more scientific carbon-inclusive quantitative verification methodology and build a comprehensive carbon trading system covering the public and industrial enterprises. [ABSTRACT FROM AUTHOR]

The goal of this paper is to discern whether environmental policy stringency discourages inbound tourism in the G7 countries. The analysis is based on second-generation panel data methods in consort with the panel quantile regression approach. The findings document that environmental policy stringency plunges inbound tourism across all quantiles. Moreover, the impact of environmental policy stringency is relatively strong at higher quantiles compared to middle and lower quantiles, while the analysis reports that per capita global GDP escalates inbound tourism at all quantiles, whereas both inflation and the real effective exchange rate plunge inbound tourism. Finally, this study proposes certain policy recommendations to promote tourism. The results also survive certain robustness tests. They also imply that the countries under consideration need to adopt special measures to promote tourism, apply strict environmental control measures, while tourists should be given incentives to offset the detrimental impact of environmental regulations. Finally, the tourism-related firms should be given higher emissions permits through an emissions trading scheme, which lowers the cost of tourism, as well as tax exemptions on their imports. [ABSTRACT FROM AUTHOR]

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]

Coordinating policies is an essential guarantee for carbon emission reduction and sustainable development. Based on the theoretical framework of the policy paradigm, we quantitatively analyze 266 policy documents on promoting carbon emission trading and green financial policies from 2011 to 2022 using the content analysis research method. Based on the matching network of "policy objectives-policy tools," we analyze the synergistic characteristics of carbon emission trading policies and green financial policies in promoting carbon emission reduction targets and reveal the matching mode of "objectives-tools" of green financial policies by using social network analysis. It is found that, first, from the perspective of policy objectives, the main policy objectives of carbon emissions trading are to promote green innovation of enterprises, and the main policy objectives of green finance are to promote green development, which reflects the consistency and endogenous motivation of policy objectives. Secondly, command-control and market incentive policy tools are the main policy tools in the structure of policy tools. The proportion of public participation policy tools is small, and there is a structural asymmetry. Third, carbon emissions trading tools focus on supervision, adjustment, and platform construction. The green financial policy tools have the characteristics of guidance, public welfare, and externality. The two constitute a complementary, embedded, and integrated ' double synergy ' carbon emission reduction policy. Based on this, this paper puts forward some suggestions to promote policy coordination and provides a reference for China to achieve the dual carbon goal. [ABSTRACT FROM AUTHOR]

Collaborative reduction of carbon and air pollutants can more efficiently achieve green technological change, industrial low-carbon transition, and high-quality economic and social development. As a typical environmental policy in China, the pilot carbon Emission Trading Scheme (ETS) has obvious advantages in achieving the collaborative reduction of carbon and air pollutants. Therefore, an evaluation of China's pilot carbon ETS from the perspective of collaborative reduction of carbon and air pollutants is performed in this paper. Compared with previous studies, first, this study innovatively uses the coupled coordination degree (CCD) model to measure the collaborative reduction level of carbon and air pollutants under different scenarios based on the panel data of China's 30 provincial-level regions during 2004–2018. Second, this study uses the DID method to evaluate the impact of China's pilot carbon ETS on the collaborative reduction of carbon and air pollutants and conducts some robustness checks and regional heterogeneity regressions. Third, this study uses the synthetic control method (SCM) further to examine the policy outcomes of the pilot carbon ETS. Scenario analysis shows that attaching importance to reducing air pollution will improve the collaborative reduction effect of carbon and air pollutants. Furthermore, the implementation of China's pilot carbon ETS exerts an effect of roughly 24.7% on reducing carbon, roughly 10.1% on reducing air pollutants, and roughly 22.0% on the collaborative reduction of carbon and air pollutants, ceteris paribus. Regional heterogeneity analysis shows that the impacts of the pilot carbon ETS are significant in all regions, except that the impact on reducing air pollutants in the central region is not significant. In addition, results from SCM indicate that the impacts of the pilot carbon ETS on the collaborative reduction of carbon and air pollutants are significantly efficient in Beijing, Tianjin, Shanghai, Hubei, and Chongqing, while not much efficient in Guangdong and Fujian. The main policy implications include strengthening the top-level design of the ETS in the collaborative reduction of carbon and air pollutants, attaching importance to the governance of air pollution, making the regional governance more targeted, and improving energy efficiency. [ABSTRACT FROM AUTHOR]

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

Green and low carbon transition is a broad and profound economic and social systematic change. Green innovation is a critical way to promote energy saving and emission reduction. Has China continuously promoted a carbon emission trading policy to significantly promote green innovation cooperation? Taking the implementation of the carbon emission trading pilot policy as a "quasi-natural experiment," this study answers this question by exploring the impact of the policy on green innovation cooperation. Based on data on 274 cities from 2008 to 2020, the multi-time difference-in-differences model is used to evaluate the impact of the policy on green innovation cooperation. The results reveal that the carbon emission trading pilot policy significantly improved inter- and intra-city green innovation cooperation through the upgrading effect of industrial structure and the coverage effect of digital finance compared with the non-pilot cities at the city level. In addition, there are significant differences in the policy effects among cities with different degrees of openness to the outside world and command-and-control environmental regulation. [ABSTRACT FROM AUTHOR]

Based on the data of listed companies in China's iron and steel industry from 2007 to 2020, the article investigates the impact mechanism and the path of action of China's carbon emissions trading pilot on the green total factor productivity of iron and steel enterprises by constructing a multi-period difference-in-difference model difference-in-differences. The study finds that: 1) China's iron and steel enterprises significantly improve their green total factor productivity driven by the carbon trading pilot, and the findings pass the corresponding robustness tests. 2) the mechanism analysis indicates that the carbon trading pilot promotes the green total factor productivity of iron and steel enterprises by forcing the technological progress of enterprises. 3) The heterogeneity analysis shows that the positive effect is more significant for large iron and steel enterprises with high social responsibility rating and high local government competition intensity, but not for small enterprises with low social responsibility rating and low local government competition intensity. 4) the dynamic effect shows that there is a certain lag in the promotion effect of the carbon emission trading pilot on the green total factor productivity of iron and steel enterprises, but its long-term effect is more obvious. This paper puts forward corresponding suggestions for accelerating the construction of a national unified green and low-carbon market system and actively promoting the deepening of the "dual-carbon" goal. [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]

The carbon emissions trading scheme (CETS) in China is an important market-based environmental policy mechanism for decreasing carbon emissions. This paper calculates the total factor carbon productivity (TFCP) based on data from 275 cities in China from 2007 to 2020 using the DEA method and investigates the impact of the CETS on regional TFCP using the differences-in-differences (DID) method, all against the backdrop of carbon peaking and carbon neutrality. The research findings reveal that CETS has consistently improved TFCP in pilot cities, and this conclusion has held up following a number of robustness tests. Temporal heterogeneity experiments demonstrate that as implementation time increases, the enhancing effect takes on an inverted "U-shaped" structure with a 7-year effective lifetime. Spatial heterogeneity studies reveal that as one moves away from the pilot cities, the policy effect on surrounding cities' TFCP is inhibited, followed by facilitation. CETS policies can influence regional TFCP through the effects of green innovation and industry upgrading, according to mediation mechanism testing. We present policy recommendations based on the research findings for meeting the "dual" carbon goals and strengthening the carbon trading mechanism. [ABSTRACT FROM AUTHOR]

This article reviews some of the foundational insights brought by Tom Tietenberg into academic research on environmental economics, along with some of the most highly cited works that credit these insights as inspiration. It follows three waves of environmental regulation: legal, command-and-control regulation of the 1970s; market-based regulations developed in the 1980s; and voluntary approaches expanded in the 1990s. Following Tietenberg's early work, the article begins with the costs of rigid regulation, the benefits of moving towards incentive-based approaches, and the role of legal liability in regulatory compliance. Having made a compelling case for market-based environmental policies, Tietenberg inspired an abundant literature on emissions trading opportunities and design issues. Among these, the roles of transaction costs, market power, banking and borrowing, and spatial differentiation in emissions trading are highlighted. Finally, attention is turned to the effectiveness of voluntary and information-based mechanisms and Tietenberg's contributions to understanding the channels through which publicly disclosed information can be acted upon. It concludes noting the continued relevance of all these strands of research as environmental economists confront the epochal challenge of climate change. [ABSTRACT FROM AUTHOR]

Carbon taxation is a highly debated environmental policy tool and can contribute to tackling climate change. Before the advent of the emission trading system in the European Union, forms of carbon taxation were present in some EU member states; furthermore, after the approval of the well-known EU Green Deal, carbon taxes can gain momentum in addressing emissions from sectors not involved in the EU Emissions Trading System. Due to this historical evolution of environmental policies over the last decades and in the presence of a system that assigns to EU member states, the governance of energy and fiscal issues, heterogeneous carbon/energy policy settings may determine the impact on growth and trade. This article provides food for thought for a policy through an empirical evaluation of the impact on the gross domestic product of trade spillovers related to carbon taxation in the European Union. [ABSTRACT FROM AUTHOR]

Accelerating climate change and the ineffectiveness of governmental policy responses have led many to hope that green parties will promote more effective policy measures. This article focuses on the Green Party of Aotearoa (GPA) which has maintained continuous parliamentary representation since 1996, receiving from 5.2 to 11% of the vote in national elections from 1999 to 2020. It has been a support partner in Labour-led governments following the 2017 and 2020 elections. Providing an account of how the GPA’s climate change policies have developed and shifted since the foundation of the party in 1990, this article seeks to answer the following question: What are the strengths and weaknesses of the intellectual outlook and climate change policies of the GPA with respect to likely effectiveness in reducing carbon emissions and combatting climate change? The critical analysis required to answer this question operates on two levels: with respect to critical policy analysis, the focus is on the scale, scope, sequencing and pace of change; while at a more fundamental level, the article explores the extent to which the GPA’s intellectual outlook and policy programme constitute an adequate response to the problems generated by neoliberalism, capitalism, class and the disproportionate influence of business over government. It concludes that although the GPA’s climate change policies are better than those of the other parliamentary parties, these policies are problematic at both levels. [ABSTRACT FROM AUTHOR]

Carbon emission trading is an important environmental policy tool to promote carbon emission reduction. With the panel data of carbon emissions trading (CET) pilots, this paper used the spatial difference-in-difference model (SDID) to test whether CET can affect the enterprise environmental responsibility and the spatial spillover effect of carbon emissions trading. The study found that CET can significantly improve the environmental responsibility level of enterprises in pilot areas. The environmental responsibility level of enterprises in surrounding areas are also improved driven by CET. In the time dimension, the role of CET in improving the enterprise environmental responsibility is gradually increasing. The impact of CET on enterprise environmental responsibility has significant heterogeneity in the dimension of ownership attributes and environmental regulation. Promoting corporate environmental protection investment is the main path for CET to improve the enterprise environmental responsibility. [ABSTRACT FROM AUTHOR]

Regulatory trading systems, such as the SO2 cap-and-trade system, are ubiquitous in environmental and natural resources law. In addition to cap-and-trade systems for pollutants such as SO2, NOx, and CO2, environmental and natural resources law uses trading in areas such as endangered species, water quality, wetlands, vehicle mileage, and forestry and farming practices. Trading, however, is rarely used as a regulatory approach in other areas of law. This Article seeks to identify the reasons for this dichotomy. To understand the dichotomy, the Article examines the uses of trading in environmental and natural resources law, where it has been successful, and where problems have arisen, including hot spots problems, environmental justice problems, measurement problems, and moral problems with the use of markets. It then considers the possibility of trading in six nonenvironmental areas of law to see whether trading can be helpful, and if not, why not. The analysis suggests a number of reasons for the dichotomy, including that (1) environmental problems tend to have larger costs and benefits, making it more worthwhile to incur the costs of a trading regime in environmental contexts than elsewhere; (2) trading may not work well because of hot spots, measurement, or other problems; and (3) trading may be inconsistent with the underlying premises of a regulatory system. Finally, in some cases, there is no good reason for the dichotomy other than institutional inertia, and trading should be considered as a supplement or replacement for existing regulatory approaches in those cases. [ABSTRACT FROM AUTHOR]

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

This study investigates the relationship between emissions trading schemes and Research and Development (R&D) productivity based on data from manufacturing industries participating in the Korean Emissions Trading Scheme (KETS). First, this study estimates the total factor R&D productivity by industry, and it is confirmed that changes in R&D productivity vary across industries. The total factor R&D productivity in Korea has been decreasing, but the annual growth trend has been increasing rapidly due to the introduction of the KETS. Based on the estimated R&D productivity, panel data model estimation is executed to reveal the effect of environmental policy on R&D productivity. Empirical results confirm that environmental policy plays a vital role in promoting R&D productivity, and policy stringency affects R&D performance. The results also find that the environmental policy encourages enterprises to participate in KETS for improving R&D productivity. [ABSTRACT FROM AUTHOR]

Carbon emission trading scheme (ETS) policy is a quota-based market-motivated environmental regulation policy that by transforming environmental responsibility of enterprises into self-consciousness behavior induces green innovation behavior in enterprises and influences the level of regional green innovation. Based on panel data on green patents in 30 Chinese provinces from 2010 to 2019, the paper uses six Chinese pilot provinces for ETS as the treatment group to investigate the induced effects of Chinese ETS policy on the quantity and quality of green technology innovation using difference in difference model and analyzes the effects of Chinese ETS policy on green technology innovation in different pilot regions using a synthetic control method. The findings indicate that (1) compared with non-pilot areas, the carbon emission trading policies in pilot areas can induce green technology innovation activities. (2) In all pilot regions, ETS policies significantly promoted the quantity and quality of green technology innovation, but the quantity promotion effect was significantly better than the quality promotion effect, and the low-quality promotion effect was better than the high-quality promotion effect. (3) In terms of individual pilot region, ETS policies in Guangdong, Hubei and Tianjin significantly promoted the quantity of green technology innovation and low-quality green technology innovation, but significantly inhibited or suppressed high-quality green technology innovation in a short term. This paper not only enriches the research on environmental equity trading policies and green technology innovation theoretically, but also provides empirical evidence for the effectiveness of carbon emission trading schemes pilots program in China. [ABSTRACT FROM AUTHOR]

Policy work in both the United States and the European Union ("EU") is underway on how best to structure border carbon adjustment ("BCA") mechanisms to protect the competitiveness of domestic industries while these enterprises make investments in reducing their greenhouse gas ("GHG") emissions. Often, these investments are costly for domestic industries, and may therefore result in lost sales in a global marketplace where companies in other jurisdictions face no parallel obligation to address climate change and thus can bring products to the market at lower cost. Such shifts in sales and production not only cause economic harm and potential job losses in nations with high levels of commitment to climate change action but also result in carbon leakage--meaning that emissions are not ultimately reduced but rather shifted to nations with more limited GHG emissions control requirements. But while the United States and the EU share an ambition to use BCA mechanisms, they have embraced different approaches to BCA design and implementation. The European Commission has determined that the adjustment methodology should credit only explicit GHG pricing tools, including carbon taxes and GHG emission allowance trading schemes, in determining which exporting countries would escape BCA tariffs. On the other hand, the U.S. government believes that border adjustments should be based on a broader climate change policy calculus, which would consider a wider set of policies that reduce GHG emissions. In this Article, we develop a taxonomy of approaches to comparing policies in importing and exporting countries and identify the two options that are most feasible from a technical and political perspective--we call these two options explicit BCA mechanisms and effective BCA mechanisms. We then further analyze the strengths and weaknesses of these two approaches. In particular, we compare explicit versus effective BCA mechanisms on the basis of their environmental effectiveness, administrative efficiency, compatibility with World Trade Organization ("WTO") law, and political viability. We conclude that BCA mechanisms that compare effective GHG prices promise better environmental outcomes and are more likely to be found compatible with WTO law than BCA mechanisms that exclusively compare explicit GHG prices. In addition, we argue that, while implementing BCA mechanisms that compare effective carbon prices creates some additional administrative challenges, many jurisdictions have trade policy pricing experience that could be harnessed to address these potential obstacles. [ABSTRACT FROM AUTHOR]

This article reviews and responds to policy frameworks across three sectors with the intention of efficiently reconciling national and EU climate-policy targets. The rationale behind national policies stems both from national policy ambitions and sector-specific commitments, but these may prove incompatible with broader EU policies such as the EU emissions trading system (EU ETS). Consequently, disparities between national and EU policies must, in turn, be adjusted accordingly, sector by sector. We show that reconciling differing policies does not necessarily rule out market-based instruments but that the efficient implementation of national targets can, in fact, build on and expand them. [ABSTRACT FROM AUTHOR]

Based on the panel data of 496 firms from 2013 to 2020, this paper empirically tests the synergistic emission reduction effect and its action path of carbon emission trading mechanism and green financial tools. The study found that carbon emission trading mechanism, green credit tool, and green bond tool all significantly inhibited corporate carbon emissions. At the same time, the synergy between the carbon emission trading mechanism and the two green financial tools further effectively reduces the carbon emissions of enterprises. Green innovation plays an intermediary role between the synergistic effect on the carbon emission reduction of enterprises. That is, the carbon emission trading mechanism and green financial tools jointly promote green innovation to achieve carbon emission reduction. The impact of synergistic emission reduction mechanism on corporate carbon emissions is heterogeneous due to differences in corporate ownership, industry and region. Accordingly, we should pay attention to the synergistic emission reduction effect of carbon emission trading mechanism and green financial tools based on the mediating role of green innovation in improving the performance of corporate carbon emissions. • Carbon emissions trading, green credit, and green bonds curb corporate emissions notably. • Synergy between emissions trading and green financial tools enhances carbon reduction. • Carbon trading and green credit boost green innovation for emission cuts. • Impact varies by ownership, industry, and region due to heterogeneity. [ABSTRACT FROM AUTHOR]

In the EU, the transport sector is the only sector with increasing GHG emissions compared to 1990. While harmful emissions have decreased due to successful regulation, transport performance, fossil fuel consumption and thus CO2 emissions have continued to increase, despite powertrain efficiency improvements. Meaningful regulation, which can be market-based (MBI) and non-market-based (NMBI) by nature, is needed to meet climate targets. To understand the mechanisms, effects and limitations of MBI and NMBI, this study investigates and evaluates selected regulations in the German road transportation sector until 2020. Therefore, this study identifies, describes, and categorizes environmental policy instrument types. Based on this step, selected instruments in the road transportation sector are identified by their type and implemented policies are described and assessed. Furthermore, an assessment methodology is developed to evaluate and score target achievement, cost-efficiency and practical feasibility by linking the outcomes of instruments to its goals. Based on the findings of this assessment, conclusions and recommendations are developed and discussed. Finally, results and general properties of policies and their type of instruments are extrapolated, and general statements about market and non-market-based instruments in a broader context for future regulation and market designs are projected. The study discovers that fuel producers and distributors, vehicle manufacturers and sellers are directly regulated by non-marked-based instruments, despite the EU Emissions Trading Scheme (ETS). On the customer side, primarily market-based implemented except for low-emission zones, which are direct regulations. The study finds that holistic representation and realistic internalization of external effects in a market is complex and will never be complete. Still, sufficient representation can be enough to drive transformation in the transport sector. The CO2 price itself is not sufficiently representing the consequential costs of climate change induced by road transport, but it helps to make low-carbon alternatives economically viable. Overall, the study finds that most implemented regulations in the German road transport sector were successful in relation to their goals. [ABSTRACT FROM AUTHOR]

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

'Green recovery' is one of the key themes of the stimulus packages implemented around the world in response to the Covid-19-related economic downturn. Recent research points to the potential role of regulation that becomes less stringent during recessions (ie countercyclical regulation) as an instrument to stimulate a quicker recovery. When this argument is put in the context of a green recovery, two key questions arise: should we implement countercyclical environmental regulation? If yes, what environmental instruments are better suited to stimulate the economy in periods of economic downturn? This article addresses these questions by discussing the risks of countercyclical environmental regulation and comparing the countercyclical effects of two critical environmental instruments: carbon taxes and cap-and-trade. The article argues that policymakers should be cautious in implementing countercyclical environmental regulation because the benefits of this practice are uncertain and it entails various risks. The article also challenges the belief common among academics and policymakers that cap-and-trade is inherently more countercyclical than carbon taxes by showing that whether this is true depends on the design of these instruments and other contingent factors. [ABSTRACT FROM AUTHOR]

This study investigates the varying effects of trade liberalization on environmental pollution from the perspective of enterprise viability. We find that trade liberalization significantly reduces pollution emissions, and the environmental effect on low viability and high viability enterprises varies. Our results also indicate that the emissions trading policy enhances the abating effect of trade liberalization on environmental pollution in both high viability and low viability enterprises, whereas the voluntary environmental policy reduces this effect. This study not only extends the applicability of new structural economics but also presents empirical evidence for further market opening and actions to improve the environment. [ABSTRACT FROM AUTHOR]

Since Weitzman (1974) raised a question on which is the better environmental policy tax or standard under asymmetric information, many authors have proposed alternatives to both tax and standard or emission trading scheme. The policy recommended in this paper is also one of them. The policy tells us that the government can set tax rates at arbitrary levels during the trial runs. The government can extract private information from observable abatement activities of firms in the trial periods. However, the government needs not only tax but also the standard for abatement and the penalty against violating the standard, because the firms may respond strategically to the tax rates set in the trial periods. Those supplemental policy devices can eliminate any strategic incentive by equating the marginal benefit and the marginal cost. As a result, we can attain the first best after the trial periods. [ABSTRACT FROM AUTHOR]

With its European Green Deal and the new European Climate Law, the EU has given itself a daunting challenge and a legal obligation to achieve a net 55% reduction of greenhouse gases by 2030 and full climate neutrality by 2050. In order to do this, it has to figure out not only how but also where such large reductions can be made. While the EU has a robust mechanism in its regulatory toolbox for achieving emissions reductions in the form of its Emissions Trading System, at the present moment the ETS does not cover the agricultural sector, which currently amounts to a full 10% of its total greenhouse gas emissions. To date, the EU has been troublingly unsuccessful at effectively reducing its agricultural emissions, though, and this will need to change in order for it to meet its goals by 2030 and 2050. Although the European Commission has not (yet) announced any formal intention to include agriculture into the ETS, it is worth evaluating the prospect of it doing so given the urgency of the present moment and the pressure on the EU to carefully consider any emissions reduction option that is available to it. This paper, therefore, contributes to this discussion by assessing the legal prospect of incorporating the EU's agricultural sector into its ETS. Its primary argument is that while doing so will require complex economic calculations along with some difficult political decision-making, from a legal perspective it would be very feasible and could even bring a number of regulatory and policy 'win-wins' in its wake. The EU's broader legal framework would be quite permissive of it if it does not upset the internal marketplace, and finding the right way to do it could bring the EU's emissions reduction, agricultural and environmental policy goals into closer alignment in ways that its current policy and regulatory frames do not. Furthermore, the ETS was intentionally designed to be a flexible mechanism and it has already demonstrated its ability to be re-tooled to address different economic sectors and new gases, and there is little indication that modifying it to apply to agricultural emissions would be beyond its capacity. [ABSTRACT FROM AUTHOR]

The carbon emissions trading pilot policy in China serves as a crucial market-oriented regulation tool to achieve green development. This study explores the impact of this policy on Chinese green TFP (GTFP). We utilize the provincial panel data from 2000 to 2017 and employ the GNDDF-Luenberger model to characterize GTFP. The results show that the carbon emissions trading pilot policy significantly improves GTFP. The effects are more pronounced in regions with more foreign direct investment, smaller technological gaps and higher levels of marketization. The carbon emissions trading pilot policy improves GTFP by promoting practical innovation. Furthermore, the promotion of GTFP through the carbon emissions trading pilot policy primarily relies on the enhancement of technological efficiency, rather than technological improvement. Our study provides policy implications for establishing an effective carbon emissions trading market in China. • We study the impact of this policy on Chinese green TFP (GTFP) and employ the GNDDF-Luenberger model to characterize GTFP. • We find that the carbon emissions trading pilot policy significantly improves GTFP. • The effects are more pronounced in regions with more FDI, smaller technological gaps and higher levels of marketization. • The carbon emissions trading pilot policy improves GTFP by promoting practical innovation. • The promotion of GTFP by carbon emissions trading pilot policy relies mainly on technical efficiency improvements. [ABSTRACT FROM AUTHOR]

The top-down governance imperative in addressing climate change distinguishes climate policies from traditional environmental policies catering to bottom-up governance demand across most countries. This study aims to explore the effectiveness of China's climate policy mix, given its representation as a country with a top-down climate governance demand and influence on global climate governance outcomes due to its enormous economic aggregate and emission base. Utilizing a balanced panel dataset comprising 288 Chinese cities from 2001 to 2020, this study employs a two-way fixed effect model to examine the impact of the carbon emission trading scheme (ETS) and the carbon emission control policy (ECP) on carbon dioxide emissions, along with their heterogeneous effects and potential mechanisms. The findings indicate that both ETS and ECP have substantially reduced carbon dioxide emissions, although their synergistic effect has not yet manifested. Specifically, a 1 CNY increase in ETS prices or a 1 % growth in ECP targets leads to a decrease of 1.232 million tons or 0.814 million tons in carbon dioxide emissions, respectively. Moreover, the effects of the ECP are reinforced in resource-based cities or those receiving greater fiscal support, while diminishing with the rise in foreign direct investment. Conversely, the heterogeneous effect of the ETS is negligible. Further mechanism analysis reveals that technological innovation and energy structure transformation are the primary channels for reducing carbon dioxide emissions. These findings carry significant implications for climate policy formulation in China and other developing countries. Graphical abstract of this study. [Display omitted] • The top-down governance demand distinguishes climate policy from environmental policy. • The effects of the carbon emission trading scheme and control policy are assessed. • The emission trading scheme and emission control policy reduce carbon emissions. • The effects of climate policies display significant heterogeneities. • Technological innovation and energy structure transformation are likely mechanisms. [ABSTRACT FROM AUTHOR]

• Focusing on the impact of geographical environment on the ETS in reducing PM2.5 concentrations. • Heterogeneity analysis according to topographic factors such as basins, coastal cities and plains. • Comparing clustered standard errors at the provincial level and clustered standard errors at the municipal level on the assessment of air pollution policy effects. The dispersion of PM2.5-related pollutants in the atmosphere is intricately connected to the natural geographical environment. Nevertheless, previous evaluations of environmental policies regarding urban PM2.5 concentrations have rarely taken into account the influence of the natural geographical environment. Utilizing panel data and DID models for 266 prefecture-level cities in China from 2006 to 2019, this study thoroughly examines the impact of geographical environment on the China's Carbon Emissions Trading Scheme (ETS) in reducing urban PM2.5 concentrations. The results suggest that (1) Neglecting the impact of natural geographical environment, although the ETS effectively reduces the PM2.5 concentration in the pilot cities from an overall perspective, there are anomalies in the robustness test and the heterogeneity analysis, which are mainly reflected in the decrease in the significance of the PSM-DID results, and the positive haze-enhancement effect of the ETSs of Fujian, Beijing, Shanghai, etc. (2) Considering the influence of geographic environment, combined with the spatial correlation between China's topographic distribution and PM2.5 concentration, four control groups of Basin, Coastal, etc. are screened for group regression, and the results show that geographic environment factors significantly affect the emission reduction effect of each ETS on PM2.5 concentration. (3) The regression results of the three types of spatial econometric models all indicate that there is a significant spatial spillover effect of ETS to reduce PM2.5 concentration. Considering the influence of geographic environment on the spatial spillover effect and the fact that China's provincial division is mostly based on geographic environment factors, in order to more reasonably assess the effect of the policy on the PM2.5 concentration, the researcher should select sample cities with no spatial correlation of PM2.5 and clustering robust standard errors to the provincial level. [ABSTRACT FROM AUTHOR]

Although our knowledge of national carbon emission trading system and green certificate trading system are powerful incentive instruments that can deliver on increasingly ambitious climate targets in China, there remains an uncertainty of systems' structural reforms. This study builds on and extends a well-established dynamic computable general equilibrium (CGE) model to incorporate carbon trading system and green certificate trading system into the modeling framework, simulating a diverse of system development pathways further allows an exploration of the many possible policy effect. Then, using total factor productivity as a comprehensive indicator to asses policy effectiveness, the evolutionary trend of comprehensive effects under different paths are separately evaluated to discover the reforms' optimal range. Our work offers main results: First, these instruments provide a price signal. The introduction of a carbon allowance auction drive up carbon prices, while the implementation of a green certificate punishment and the expansion of the trading scope promote an increase in green certificate prices. Second, all policy scenarios that help reduce carbon emission intensity and optimize the power supply structure. However, in achieving the net-zero goal, the green certificate policy incurs more economic costs than the carbon trading policy. Indeed, the combination of multiple policy tools alleviates the decline of social welfare levels. Third, synergism design among policy tools: the focus should be on carbon trading policy from 2021 to 2030, green certificate trading policy from 2030 to 2050, and strengthened policy from 2050 to 2060. Reform measures within policies may need to be introduced in a timely manner. This study offers specific insights and tailored policy proposals to support policymakers in balancing environmental goals with economic and social needs in light of the aforementioned findings. Fig. 1. Introduction of the research questions Fig. 2. Framework of this paper. [Display omitted] • Carbon emission trading and green certificate trading policies were introduced into a dynamic CGE model. • The comprehensive performance of different scenarios were measured using total factor productivity index. • The policy effects of different scenarios were explored from 2020 to 2060. • The even more effective reform measures were adopt, within a single policy. • A sensible mix were proposed, within different policies. [ABSTRACT FROM AUTHOR]

The trading of carbon emissions is a crucial regulatory method to address environmental pollution issues. This study takes China's carbon emission trading pilot policy established in 2013 as a quasi-natural experiment and uses the DID model to empirically test the urban panel data from 2006 to 2019. The results show that the carbon emission trading pilot policy can effectively reduce urban environmental pollution, and this effect is more noticeable in mid-western cities, northern cities, cities with fewer resources, and large-scale cities. In addition, to address the urban environmental pollution problem through this policy, the government is encouraged to raise its environmental protection awareness and put more effort into the innovation of technology. In general, this study uses carbon emission trading policies from China to confirm that market-based incentive environmental regulation tools can effectively reduce environmental pollution in urban areas. These findings can provide more theoretical support and empirical evidence for the government to use mechanisms of the market to effectively solve pollution problems, improve ecological environment quality, and accelerate the realization of green economy. • The DID model is used to track pilot policy impact on urban environmental pollution. • Carbon emission trading pilot policy can reduce urban environmental pollution. • The government's environmental awareness is the channel of action. • The government's technological innovation efforts are the channel of action. [ABSTRACT FROM AUTHOR]

This paper examines the investment incentives of market-based regulation, focusing on the technology characteristics that different regulatory schemes tend to incentivize. The firms' technology choice is socially optimal if and only if the aggregate emission allowance supply is completely inelastic. Furthermore, in the presence of uncertainty, elastic emission allowance supply, and strictly convex environmental damage, it is optimal to tax investments in technologies that induce a large variance in emissions. Lastly, price elastic supply of emission allowances may either increase or decrease the volatility in the product market, depending on the risk environment the firms face. The results indicate that introduction of permit price-stabilizing measures in an emission trading system will come at the cost of suboptimal technology investments, and may also lead to increased fluctuations in product prices. • I examine investment and technology characteristics induced by environmental regulation. • Firms' technology choice is suboptimal unless the cap on emissions is exogenous. • It is optimal to tax investment in technologies that induce large variance in aggregate emissions. • Elastic emission allowance supply can impact product market volatility. [ABSTRACT FROM AUTHOR]

China's ambitious endeavor to curtail carbon emissions has led to heightened governmental attention on addressing the issue of excessive carbon emissions. As governmental tolerance for such emissions diminishes, governments promote and support more proactive emission reduction methods of green innovation in enterprises. This study analyzes panel data from Chinese-listed businesses to explore the correlation between regional carbon emission pressure and green innovation. Our findings indicate a positive relationship between carbon emission pressure and enterprises' engagement in green innovation initiatives. Governmentenvironmental attention, punitive regulations, and incentive subsidies are the main channels. Market policies, including carbon emission trading and green credit policies, potentially impact the interplay between carbon emission pressure and green innovation. Moreover, our heterogeneity analysis underscores that enterprises facing looser financing constraints, exhibiting more social responsibility initiatives, and operating within polluting industries tend to experience a more pronounced positive impact than their counterparts in other sectors. • Regional carbon emission pressure has significantly promoted enterprises' green innovation. • Government awareness, punitive regulations, and incentive subsidies are the main channels. • The 2015 Paris Agreement in 21st United Nations Climate Change Conference contributes to the promotion of green innovation of enterprises. • The carbon emission trading and green credit policies enhance the promotion of green innovation. [ABSTRACT FROM AUTHOR]

As the climate crisis intensifies, there is growing interest in policies that might supplement emissions reduction and adaptation, such as carbon removal systems and solar radiation modification. One newly prominent class of proposed interventions, which we call "radical adaptation," would aim to stabilize Antarctic ice sheets, the loss of which threatens significant sea-level rise worldwide. Ice-sheet stabilization does not fit neatly within the conventional taxonomy of climate responses. Like adaptation, it would target the consequences of climate change, not the causes. But it would do so through spatially concentrated, high-leverage developments to reduce harms worldwide, rather than by separate actions in thousands of threatened coastal regions. Furthermore, these interventions would have to be researched, assessed, and executed in the unique geopolitical, legal, and administrative context of Antarctica. This Article examines how radical adaptation might interact with the governance and geopolitics of the Antarctic Treaty System. It argues that early research into ice-sheet stabilization could readily proceed under the present system. Operational deployment would require substantial governance changes, but these may be less extreme than they initially appear and may even benefit Antarctic governance more broadly. Researching and developing ice-sheet stabilization could provide an avenue to sustain the System's core values of peace, science, and environmental protection, while also strengthening its global legitimacy. The governance challenges under the Antarctic Treaty System are substantial, but they are ultimately surmountable. [ABSTRACT FROM AUTHOR]

In this paper, we theoretically analyze that how emission discrimination policies affect the environmental effectiveness of carbon emission trading scheme under different emission permit allocation rules. By the setting of duopoly, we characterize the environmental effectiveness of carbon emission trading scheme, design various emission discrimination policies and then explore connections between the environmental effectiveness and emission discrimination policies. Our main results suggest that not all environmental effectiveness of carbon emission trading schemes are very sensitive to emission discrimination policies. Under grandfathering rule, the emission discrimination policy is not valid to facilitate the environmental effectiveness of carbon emission trading scheme. However under benchmarking rule, the environmental effectiveness of carbon emission trading scheme can be remarkably improved by an appropriate emission discrimination policy. Furthermore, we also compare the actual emissions in carbon emission trading schemes and conclude that the carbon emission trading scheme with benchmarking rule is a better choice for an 'active' regulatory authority from the viewpoint of policy efficiency. [ABSTRACT FROM AUTHOR]

The goal of this paper is to analyze the effectiveness of the environmental taxes and emissions trading in achieving cleaner production, that is, higher production per unit of emissions in the European Union (EU). The hypothesis of the paper is that the combined use of taxes and emission permits yields synergistic benefits in addition to their individual contributions. The paper uses panel analysis on the EU27 data from 2005 to 2012. The analysis does not robustly find positive effects from the interaction of these policy instruments, but it confirms that there are no negative ones. Additional interesting results are that, on average, (i) the effects of both instruments on production cleanliness are more beneficial at the regulated industries than at the national level, (ii) emissions trading is more effective than taxes, (iii) both instruments are more effective in the EU15 than in the EU12, and (iv) crisis did not significantly affect production cleanliness in the EU. [ABSTRACT FROM AUTHOR]

The formation and allocation of an emission quota are analyzed in a common agency framework with two stages. First, the principals lobby for the size of the aggregate quota. Second, the principals lobby for the individual slices of the quota. It is shown that the slices are allocated such that the marginal profits of the principals are equalized and that the size of the aggregate quota is either set at the efficient level characterized by the Samuelson's rule for public goods or distorted from that level. When the quota is distorted from the efficient level it is set such that the aggregate marginal profit is less than the marginal damage, resulting in an overallocation of individual and aggregate quotas. However, efficient level of the quota is obtained in a reasonable special case in which countries take the role of the principals. The results are extended to cover tradable emission permits. [ABSTRACT FROM AUTHOR]

This article describes the birth of air pollutant regulation and its transformation, which, formerly under state control, moved on to a regime based on market instruments. The author shows the gradual commercialization of the approach to air pollution problems, whose origins can be traced to the United States, summarized in three different historic moments: the Emission Trading Program (1982), the Average between Refineries (1985), and the Acid Rain Program (1995). These experiments, in a framework of the command and control environmental regulatory regime, led to the creation of the first atmospheric contaminant emissions market in world history and opened up the road to the new "cap and trade" environmental regulatory regime. [ABSTRACT FROM AUTHOR]

With the development of ecological paradigm coupled with the relentless implementation of myriad environmental policies in China, the rapid development of carbon emission trading and carbon trading market has had a vital impact on the financial performance of enterprises at the microlevel. This study has sampled the A-share listed companies in China, from 2009 to 2018, and adopted the difference-in-difference (DID) method to investigate the effect of the carbon emission trading on corporate financial performance from the microlevel. Evidence showed that the implementation of carbon emission trading effectively improved the total asset-liability ratio of enterprises, though it reduced the value of the current capital market. Moreover, in the regions under strict legal environment, the enhancement effect of the total asset-liability ratio was more obvious, whereas in the regions under loose legal environment, the reduction effect of the value of the capital market was more obvious. Further analysis showed that the implementation of carbon emission trading could not promote Chinese enterprises to increase R&D investment. Hence the implementation of carbon emission trading has improved the level of non-business income of enterprises incorporated into the trading system, but its impact on the investment income of enterprises was not significant. [ABSTRACT FROM AUTHOR]

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 EU ETS. In literature focusing on the impacts of the EU ETS, the EU is usually considered to be a compact unit and its structure is omitted there. In particular, the impacts on a single company (regardless its geographical location), on a sector of industry (regardless the member countries), or on some subset of the involved companies with respect to non-EU competitors are often explored. However, through the eyes of national governments, it is vital for the countries to keep their national industrial sectors competitive not only against companies from countries outside the EU but also from other EU countries. This paper focuses on the influence of the EU ETS on the national steel sectors in the EU and their competitiveness. The hybrid PROMETHEE-DEA approach is used to assess how the price of emission allowance and grandfathering within the EU ETS impact the technical efficiency and competitiveness of these national sectors. The results of this study show that the volatile allowance price influences the efficiency and grandfathering affects the competitiveness of the EU national steel sectors. [ABSTRACT FROM AUTHOR]

This study assesses the non‐linear effects of green bonds, conventional bonds and energy commodities on the behaviour of the cap‐and‐trade European Union carbon market (European Union Emissions Trading System [EU‐ETS]). By estimating four models, using Markov‐switching (MS) econometric methodology, non‐linearities are confirmed in dynamic behaviours, observing in the global calculation a positive effect of green bonds (S&P Green and Sol Green) on the carbon market, in regimes of both high and low volatility, whereas conventional bonds (S&P Agg) and energy commodities (DJCI En) contribute to a decrease in the carbon market in regimes of high volatility. The relevance of green bonds is underlined in determining the behaviour of the carbon market, besides observing greater persistence of the low volatility regime. These results allow both investors and fund managers to implement strategies in different volatility or economic activity contexts through a diversified portfolio and green/climate structure. [ABSTRACT FROM AUTHOR]

The Emission Trading Scheme (ETS) provides a market mechanism to mitigate carbon emissions and has been introduced in many countries. Its fundamental idea is to make carbon emissions costly. Consequently, firms undertaking cross-border expansions may have to consider this extra cost when entering markets with an ETS. They may avoid these countries or relocate their investment to countries without an ETS. Using a large sample of international firms between 2002 and 2019, we investigate this issue via a difference-in-difference approach. Our results show that ETS implementation leads to significantly less cross-border merger and acquisition (M&A) deals in the host countries, indicating an avoidance effect or potential carbon leakage. Further analysis reveals that ETS implementation decreases firms' financial performance and increases market risks, both contributing to cross-border M&A decisions. We demonstrate strong evidence of cross-sectoral differences, where carbon-intensive sectors tend to bear higher costs. This study contributes to the environmental economics and finance literature and provides evidence with policy relevance. • This paper explores the effects of Emission Trading Schemes on cross-border M&As. • ETS implementation is associated with a significant reduction in cross-border M&As. • The introduction of ETS can lead to lower financial performance of the acquiring firms. • Climate policy can significantly influence firms' strategic investment decisions. [ABSTRACT FROM AUTHOR]