Are Green Bond and Carbon Markets in Europe complements or substitutes? Insights from the activity of power firms

Rannou, Yves; Boutabba, Mohamed Amine; Barneto, Pascal

doi:10.1016/j.eneco.2021.105651

Cited by 52 publications

(21 citation statements)

References 26 publications

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“…Taken together, our results underline the importance of the liquidity risk for investors when they decide to trade green bonds for pro-environmental choices, tax incentives (Zerbib, 2019), diversification (Sangiorgi and Schopohl, 2021) or carbon hedging (Jin et al, 2020;Rannou et al, 2021).…”

Section: Introductionmentioning

confidence: 53%

“…More recently, a broader range of investors including asset managers, insurance companies, banks, corporate treasuries, retail investors, and the European Central Bank invested the European green bond market. With the advent of green bond indexes and green bond exchange-traded funds (ETFs), green bond investing becomes part of passive portfolio strategies or used as carbon hedging strategies (Jin et al, 2020;Rannou et al, 2021).…”

Section: [Insert Table 1 Here]mentioning

confidence: 99%

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Investor strategies in the green bond market: The influence of liquidity risks, economic factors and clientele effects

Boutabba

Rannou

2022

International Review of Financial Analysis

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Section: Introductionmentioning

confidence: 53%

Section: [Insert Table 1 Here]mentioning

confidence: 99%

Investor strategies in the green bond market: The influence of liquidity risks, economic factors and clientele effects

Boutabba

Rannou

2022

International Review of Financial Analysis

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“…Numerous studies evidence the relationship between (i) oil prices and green bonds (Azhgaliyeva et al 2022(Azhgaliyeva et al , 2021Dutta et al 2021;Lee et al 2021;Reboredo and Ugolini 2020;Saeed et al 2021;Su et al 2022), (ii) oil prices and CO 2 emissions (Alhodiry et al 2021;Ali et al 2022;Habib et al 2021;Maji et al 2020;Mensah et al 2019;Mujtaba and Jena 2021;Sadorsky 2009;Wen et al 2017;Zhang and Zhou 2022;Zou 2018), and (iii) green bonds and CO 2 emissions (Jin et al 2020;Lichtenberger et al 2022;Nenonen et al 2019;Rannou et al 2021;Ren et al 2022a;Tiwari et al 2022;Wang et al 2022).…”

Section: Introductionmentioning

confidence: 99%

A Wavelet Analysis of the Dynamic Connectedness among Oil Prices, Green Bonds, and CO2 Emissions

Marín-Rodríguez

González-Ruiz

Botero-Botero

2023

Risks

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Wavelet power spectrum (WPS) and wavelet coherence analyses (WCA) are used to examine the co-movements among oil prices, green bonds, and CO2 emissions on daily data from January 2014 to October 2022. The WPS results show that oil returns exhibit significant volatility at low and medium frequencies, particularly in 2014, 2019–2020, and 2022. Also, the Green Bond Index presents significant volatility at the end of 2019–2020 and the beginning of 2022 at low, medium, and high frequencies. Additionally, CO2 futures’ returns present high volatility at low and medium frequencies, expressly in 2015–2016, 2018, the end of 2019–2020, and 2022. WCA’s empirical findings reveal (i) that oil returns have a negative impact on the Green Bond Index in the medium term. (ii) There is a strong interdependence between oil prices and CO2 futures’ returns, in short, medium, and long terms, as inferred from the time–frequency analysis. (iii) There also is evidence of strong short, medium, and long terms co-movements between the Green Bond Index and CO2 futures’ returns, with the Green Bond Index leading.

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“…Along with carbon emission trading schemes and carbon emission tax, green bonds are also an important strategy to reduce CO 2 emissions (Lee, Lee, et al, 2021; Lee, Xu, et al, 2021; Shen et al, 2022). Some researchers used this method to understand how to reduce emission levels, such as Rannou et al (2021) who looked at the green bond market's correlation with the European carbon market. They showed that green bonds could be used for future carbon reduction, but did not consider it a carbon neutrality instrument within a carbon tax.…”

Section: Introductionmentioning

confidence: 99%

A green path towards sustainable development: Optimal behavior of the duopoly game model with carbon neutrality instruments

Hussain

Lee

2022

Sustainable Development

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Carbon emission is a global issue, and China is facing many problems to resolve it, especially in emission‐generating companies (EGCs). To maintain sustainable development, it is necessary to reduce carbon emissions for the well‐being of society, and carbon neutrality can play an important role. With China targeting the goal of carbon neutrality to reduce carbon emissions, this research aims to bridge the gap in the literature by considering carbon neutrality instruments in a duopoly market. The study sets up a mathematical model of the duopoly game to achieve desired objectives and then applies a simulation‐based optimization technique to examine the mathematical model under different experiments. After manipulating various scenarios to find the optimal values of carbon neutrality instruments, the results indicate that green bond provision, emission tax, and emission quota play a vital role in carbon neutrality. Different combinations of carbon neutrality instruments reduce various levels of carbon emissions. We further show that a combination of emission tax upon EGCs plays a key role in reducing carbon emissions during the fifth scenario. In the second scenario, a combination of green bond provision and emission tax reduces carbon emissions, but is lower than the fifth scenario. This research offers a reference for policymakers to move towards carbon neutrality, and it is beneficial for the government to decide the optimal values of carbon neutrality instruments.

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Are Green Bond and Carbon Markets in Europe complements or substitutes? Insights from the activity of power firms

Cited by 52 publications

References 26 publications

Investor strategies in the green bond market: The influence of liquidity risks, economic factors and clientele effects

Investor strategies in the green bond market: The influence of liquidity risks, economic factors and clientele effects

A Wavelet Analysis of the Dynamic Connectedness among Oil Prices, Green Bonds, and CO2 Emissions

A green path towards sustainable development: Optimal behavior of the duopoly game model with carbon neutrality instruments

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