Assessing the impact of ETS trading profit on emission abatements based on firm-level transactions

Abstract

The EU Emission Trading System (ETS) is the oldest and currently the largest carbon market in the world, but its purpose of stimulating carbon emissions via trading profits remains unexamined. Based on the complete firm-level transaction records of the EU ETS Phases I and II, here we show that the participating firms' trading profits and their emission abatements are positively correlated, and the correlation becomes stronger in Phase II than Phase I. Specifically, we observe that non-linearity exists in the correlation; higher firm-level emission abatements can realize larger trading profits. This pattern affects the market fairness, though it may be helpful to incentivise emission abatements. The correlation is more regulated in Phase II than it is in Phase I, thereby indicating that the Phase II is more mature. We also observe that the state-level abatements are largely driven by industrial giants.

Measuring the Demand Connectedness among China’s Regional Carbon Markets

“…The CO 2 emissions of the industrial sector have been reduced [ 6 , 7 ], which also co-benefits the environment [ 8 ], as well as the obvious reduction in regional CO 2 intensity [ 9 ]. Such effects are also found with EU emission-trading system [ 10 , 11 ]. Meanwhile, since the long-term emissions of enterprises may require greater costs, and in order to adapt to the green transformation of the entire society, carbon emission trading can also be said to promote green innovation and low-carbon technological progress [ 12 , 13 , 14 , 15 ].…”

Modeling Intercity CO2 Trading Scenarios in China: Complexity of Urban Networks Integrating Different Spatial Scales

“…In addition, the transaction subjects of realistic carbon trading are mainly enterprises. Some studies have analyzed the impact of carbon trading policies on enterprises [64], such as how such policies incentivize enterprises to carry out low-carbon technology innovations. However, this study takes an innovative approach to the trading subject and proposes the concept of intercity carbon trading.…”

A Review of Improvements in Power System Flexibility: Implementation, Operation and Economics

“…In [170], the authors discussed carbon emission rights trading with a special focus on emission rights and the electricity market trading based on market allocation strategies and election mechanisms. The authors of [169,171] investigated the relationship between the stock price of the new and old energy firms and carbon emission rights. It was discovered that both the new and the old companies were seriously affected by carbon emission rights.…”