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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]

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]

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]

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 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]

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]

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]

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]

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]

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]

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]

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]

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]

The literature on policy dynamics has long argued for a better conceptualization and measurement of the dependent variable ("policy"), but this fundamental point has often been neglected in the policy feedback literature. In this paper, we explore how far disaggregating policy into different elements (policy instruments, objectives, and settings) addresses this gap. We do so by examining the world's largest market-based climate policy instrument—emissions trading in the European Union—and reveal a number of valuable new insights. First, even if positive policy feedback locks in a policy instrument, actor contestation does not disappear, but narrows down to the more detailed level of policy settings. Second, feedback may operate differently at each policy level: the policy instrument and its settings may strengthen at the same time as support for broader objectives weakens. Finally, positive feedback may simultaneously strengthen opposing actors' support for multiple policy elements, leading to a form of "policy stability by stalemate." These findings highlight the need for a new, interdisciplinary phase of policy feedback research that more fully disaggregates the dependent variable across a wider range of policy areas and policy instrument types. Policy scientists are well equipped to contribute to and benefit from such a debate. [ABSTRACT FROM AUTHOR]

Over the past 20 years, scholars have examined the role policy transfer has had on the development of environmental policies across the globe. The literature in this area has discussed everything from the movement of cap-and-trade policies to the movement of rain barrels. As the name 'policy transfer' implies, studies tend to focus on the successful movement of a policy or program. Part of the reason for this focus is that studies tend to neglect the role power and time play in the transfer process. To begin addressing this, the concepts of power most commonly associated with the three faces of power debate and ideas of political time, policy time and 'chronological' time (i.e. timing, tempo, time) can help explain a range of environmental transfers (or non-transfers) better than the existing literature. [ABSTRACT FROM AUTHOR]

Scholars of environmental market-based policy instruments (MBIs), such as cap-and-trade and biodiversity offsetting programs, have extensively documented MBI's market-like features, including the ways they incentivize producing environmental quality, risk subordinating nature protection to capital accumulation, and are supported by state-driven projects of market-building ('re-regulation'). A less emphasized dimension of MBIs is examined: the ways these institutions are founded upon a substantial thickening of state infrastructural power, which amounts to expanding state control over economic and environmental life in ways that outstrip processes of re-regulation. Appreciating the linkages between MBIs and expanding state control over environmental quality may help explain routine conservative resistance to these policy developments. Affinities between MBIs and regulatory thickening also call into question the degree to which MBIs should be thought of as 'liberalizing' policy instruments and suggests that, perhaps counterintuitively, the growth of MBIs may present new opportunities for expanding public control over environmental quality. [ABSTRACT FROM AUTHOR]

Despite concerns on their effectiveness and legitimacy, carbon markets are often presented as the main tool of climate policy. Developing countries are particularly eager to establish and interlink their carbon markets to benefit from global climate investment flows. Turkey is a belated but willing player in this endeavor. In tracing the ambivalent politics of establishing a carbon market in Turkey, we focus on the perceptions of different actors vis-à-vis carbon marketization attempts. Using policy documents, 22 expert interviews, and process tracing, we question the underlying assumptions on carbon markets in a country with unambitious climate targets. Our findings suggest that the making of carbon market in Turkey is not necessarily a rational, national interest-driven process but instead one promoted by the international organizations including World Bank and the EU. We conclude that this preference for market-based instruments defer public interest, favor more incremental policies, and ignore distributive justice concerns. [ABSTRACT FROM AUTHOR]

Abstract Few studies of policy mix concerning renewable portfolio standards (RPS) and emissions trading (ET) investigate a scenario in which the retailer is required to comply with quota obligations. This paper focuses on the impact of RPS, with an ET counterpart, on the electricity market when RPS are imposed on the state grid companies. The evolution game is employed to model transactions between multiple buyers and multiple sellers. The results show that ET enhances the price competitiveness of electricity from renewable energy source (RES-E) and reduces power generating companies' profit at the same time. On the other hand, when the RPS level goes up, the state grid companies gain a windfall created by the difference between the lower wholesale price of thermal power and the unchanging retail price. The windfall will be used to pay for the increasing cost of supporting RES-E. Thus, the thermal power generating companies are confronted with the double cost when introducing ET and RPS, but the state grid companies do not pay for the cost of supporting RES-E. This paper appeals to the Chinese government for the assessment of policy effects from a policy mix perspective. Highlights • The evolution game is employed to model transactions between multiple sellers and multiple buyers. • The quota obligation imposed on the state grid company is studied. • Emissions trading hurts the renewable power generating companies' profit and enhances the price competitiveness of RES-E. • The state grid companies do not pay for the cost of supporting RES-E. • The thermal power generating companies bear both the cost of emissions trading and the cost of supporting RES-E. [ABSTRACT FROM AUTHOR]

Environmental policies may have important consequences for firms' competitiveness or profitability. For the European Union Emissions Trading System (EU ETS) the empirical literature documents that significant emissions reductions have resulted from it. Surprisingly, however, the literature shows that there have been hardly any concurrent negative effects on firms' competitiveness during the first two phases of the scheme (2005-2012). We show that the main explanations for the absence of negative impacts on competitiveness are a large over-allocation of emissions allowances leading to a price drop and the ability of firms to pass costs onto consumers in some sectors. Cost pass-through combined with free allocation, in turn, partly generated windfall profits. In addition, the relatively low importance of energy costs indicated by their average share in the budgets of most manufacturing industries may have limited the impact of the EU ETS. Finally, small but significant stimulating effects on innovation have been found so far. Several factors suggest that over-allocation is likely to remain substantial in the upcoming periods of the scheme. Therefore, we expect to see no negative competitiveness effects from the EU ETS in Phases III and IV (2013-2030). Key policy insights Empirical literature on the EU ETS shows that there have been hardly any effects on firms' competitiveness or profitability. One main explanation is a large over-allocation of emissions allowances leading to a price drop. This reduced incentives for innovation. Moreover, firms were able to pass costs on to consumers in some sectors which partly generated windfall profits. Innovation effects have so far been small but positive. We expect to see no negative competitiveness effects on regulated firms in the near future suggesting that no further reliefs for regulated firms are required. [ABSTRACT FROM AUTHOR]

Greenhouse gas emissions are a worldwide concern, especially in China, who has become the largest greenhouse gas emitter. In 2013, China initiated pilot emissions trading schemes (ETS) in seven regions with the aim of creating a national system by 2017 to reduce carbon emissions at low cost. We provide a systematic overview of the practice, performance, and problems of China's ETS pilots during the first stage, which lasted from 2013 to 2016, and highlight some proposals for the forthcoming national system. We depict the features of the pilots by focusing on the core elements of the ETS: scope, cap setting, allocation, MRV, and compliance. The performance of China's ETS pilots is characterized by low carbon prices with severe temporal fluctuation, and low levels of liquidity with high compliance rates. The problems include over-allocation of emission allowances, inadequate legal and regulatory infrastructure, underdevelopment of the carbon financial market, and poor market transparency. Accordingly, we propose recommendations from the perspective of legislation, cap setting, transparency, price management, and policy coordination. [ABSTRACT FROM AUTHOR]

The Paris Agreement establishes provisions for using international carbon market mechanisms to achieve climate mitigation contributions. Environmental integrity is a key principle for using such mechanisms under the Agreement. This paper systematically identifies and categorizes issues and options to achieve environmental integrity, including how it could be defined, what influences it, and what approaches could mitigate environmental integrity risks. Here, environmental integrity is assumed to be ensured if the engagement in international transfers of carbon market units leads to the same or lower aggregated global emissions. Four factors are identified that influence environmental integrity: the accounting for international transfers; the quality of units generated, i.e. whether the mechanism ensures that the issuance or transfer of units leads to emission reductions in the transferring country; the ambition and scope of the mitigation target of the transferring country; and incentives or disincentives for future mitigation action, such as possible disincentives for transferring countries to define future mitigation targets less ambitiously or more narrowly in order to sell more units. It is recommended that policy-makers combine several approaches to address the significant risks to environmental integrity. Key policy insights Robust accounting is a key prerequisite for ensuring environmental integrity. The diversity of nationally determined contributions is an important challenge, in particular for avoiding double counting and for ensuring that the accounting for international transfers is representative for the mitigation efforts by Parties over time. Unit quality can, in theory, be ensured through appropriate design of carbon market mechanisms; in practice, existing mechanisms face considerable challenges in ensuring unit quality. Unit quality could be promoted through guidance under Paris Agreement Article 6, and reporting and review under Article 13. The ambition and scope of mitigation targets is key for the incentive for transferring countries to ensure unit quality because countries with ambitious and economy-wide targets would have to compensate for any transfer of units that lack quality. Encouraging countries to adopt ambitious and economy-wide NDC targets would therefore facilitate achieving environmental integrity. Restricting transfers in instances of high environmental integrity risk - through eligibility criteria or limits - could complement these approaches. [ABSTRACT FROM AUTHOR]

Abstract The current global momentum for carbon pricing has lately produced innovative hybrids: carbon taxes allowing the use of offsets from emission sources not targeted by the carbon tax for compliance with the tax load. This study aims at filling the knowledge gap in existing literature by exploring the potential impacts of domestic offset components in carbon taxes on mitigation of national emissions, including the country examples Colombia, Mexico and South Africa. The findings indicate that the use of offsets in carbon taxes may significantly influence mitigation of national emissions both positively and negatively. On the one hand, this model may result in real emission reductions from offset projects and positive spillover effects of efforts to reduce emissions from emission sources covered by the carbon tax to other emission sources. Furthermore, the offsetting component can be used as a bargaining chip in political negotiations facilitating the introduction of mitigation policies and measures and/or strengthening their ambition level. On the other hand, it also entails serious risks: Offsetting could compromise the environmental integrity of the carbon tax through low-quality offsets. Furthermore, offsets reduce incentives to curb emissions in the emission sources covered by the carbon tax, potentially leading to carbon lock-in effects. Moreover, an offsetting component could provoke opposition to further climate policies and measures for emission sources generating offsets, as replacing the offsetting component with mandatory emission reduction policies would eliminate revenues from offset credits. General opposition of stakeholder groups to the introduction of offsets may even hinder the introduction of carbon pricing instruments and offsetting altogether. The study identifies options that could be employed to increase potential positive effects of introducing an offset component to a carbon tax and mitigate related risks, pointing to the country examples included, where appropriate. Highlights • Allowing the use of offsets for compliance with a carbon tax may significantly influence national emissions mitigation. • The use of offsets may seriously affect the amount of revenues from the carbon tax. • Meaningful and comprehensive stakeholder involvement is key for increasing support and reducing opposition to offsetting. • Opportunities and risks of design options should be considered carefully to reach a balance between different policy goals. • Offset regulations have to ensure environmental integrity to not undermine the carbon tax's impact on emissions mitigation. [ABSTRACT FROM AUTHOR]

Highlights • The impact of the ETS on social equity is assessed. • A dynamic CGE model with disaggregated labor and household sectors is developed. • Employment in China's coal industry will decline by 75% in 2030 in the ETS scenario. • ETS revenue will peak at 2278 billion yuan in 2042 in our scenario. • ETS revenue redistribution can reduce the Gini coefficient by 10% compared to BAU. Abstract Carbon dioxide emissions trading systems (ETS) are an important market-based mitigation strategy and have been applied in many regions. This study evaluates the potential for a national ETS in China. Using a dynamic computable general equilibrium (CGE) model with detailed representations of economic activity, emissions, and income distribution, we examine alternative mitigation policies from now until 2050. Based on statistical and survey data, we disaggregate the labor and household sectors and simulate the impacts of ETS policies on the incomes of different household groups. We find that ETS has the potential to reconcile China's goals for sustained, inclusive, and low-carbon economic growth. Results show some key findings. First, the number of unemployed people in energy-intensive industries such as coal and construction will continue to increase; by 2050, employment in the coal industry will decline by 75%. Second, if the scope of the carbon market extends to all industries in China, carbon market revenues will continue to increase, reaching a maximum of 2278 billion yuan ($336 billion) in 2042 to become the world's largest carbon market. Third, the distribution of benefits from the national ETS can help achieve greater social equity. By comparing different distribution policies, we find that the combination of targeted subsidies for unemployed coal workers and direct household subsidies based on proportional per capita will reduce the social income gap to the greatest extent compared with other scenarios. By 2050, this distribution policy will reduce the Gini coefficient in China by 10% compared to the Business as Usual (BAU) scenario. [ABSTRACT FROM AUTHOR]

Reducing GHG emissions and mitigating climate change would require significant investments in renewable energy technologies. Foreign direct investments (FDI) in renewable energy (RE) have increased over the last years, contributing to the diffusion of RE globally. In the field of climate policy, there are multiple policy instruments aimed at attracting investments in renewable energy. This article aims to map the FDI flows globally including source and destination countries. Furthermore, the article investigates which policy instruments attract more FDI in RE sectors such as solar, wind and biomass, based on an econometric analysis of 137 Organisation for Economic Co-operation and Development (OECD) and non-OECD countries. The results show that Feed in Tariffs (FIT) followed by Fiscal Measures (FM), such as tax incentives and Renewable Portfolio Standards (RPS), are the most significant policy instrument that attract FDI in the RE sector globally. Regarding carbon pricing instruments, based on our analysis, carbon tax proved to be correlated with high attraction of FDI in OECD countries, whereas Emissions Trading Schemes (ETS) proved to be correlated with high attraction of FDI mainly in non-OECD countries. Key policy insights Feed in Tariffs is the most significant policy instrument that attracts FDI in the Renewable Energy sector globally. Fiscal Measures (FM), such as tax incentives, show a significant and positive impact on renewable energy projects by foreign investors, and particularly on solar energy. Carbon pricing instruments, such as carbon taxation and emissions trading, proved to attract FDI in OECD and non-OECD countries respectively. Public investments, such as government funds for renewable energy projects, proved not as attractive to foreign private investors, perhaps because public funds are not perceived as stable in the long run. [ABSTRACT FROM AUTHOR]

This paper examines the interaction of different policies used to control two types of agricultural pollution. Pollution control policy is efficient when both pollution types are controlled by taxes, although a tax increase on one type of pollution can increase the quantity of another type of pollution if farm inputs are substitutes. However, if one of the pollutions is controlled by a local emissions trading scheme, and another pollution type is taxed, then the pollution type which is taxed becomes less responsive to a change in its own tax levels. This policy scenario results in inefficient levels of environmental pollution outcomes unless the cap for the local emissions trading scheme is constantly being shifted in response to the tax. [ABSTRACT FROM AUTHOR]

Highlights • Real-world emission parameters for estimating MSW open burning. • A country specific and global EFs for estimating GHGs and other harmful pollutants. • MSW open burning practices more prevalent in sub-urban area than municipality core. • Lower waste collection efficiency reveals higher fraction of population burning MSW. Abstract Open burning of municipal solid waste (MSW) is a poorly-characterized and frequently-underestimated source of air pollution in developing countries. This paper estimates the quantity of MSW that was burned in five erstwhile municipalities of the Kathmandu valley, Nepal. A household survey, a transect walk survey, an experiment to measure the fraction of waste that is combustible, a survey on fraction of population burning waste outside their houses, and a survey of the fraction of MSW burned at dump sites were performed in this study, whereas burning/oxidation efficiency, municipal populations, MSW generation rates, and emission factors were derived from the literature. The total mass of MSW burned during 2016 is estimated to be 7400 tons (i.e., 20 tons/day), which was of 3% of the total MSW generated in the valley municipalities that year. This exceeds Government estimates by a factor of three. Multiplying the burned MSW mass by emission factors, the air pollutant emissions are estimated as PM 2.5 55 tons (OC 42 tons and EC 1.4 tons), PM 10 60 tons, BC 25 tons, CO 2 11,900 tons, CH 4 30 tons, SO 2 5.0 tons, NO x 19.2 tons, CO 630 tons, NMVOC 112 tons, and NH 3 5.7 tons per year. Open burning of MSW can trigger health impacts such as acute and chronic respiratory disease, heart diseases, and allergic hypersensitivity, in addition to impacts on local climate. Improved waste-segregation practices at the source and waste-collection systems throughout the valley are needed to mitigate this pollution source and its effects. [ABSTRACT FROM AUTHOR]

Considerations to decarbonize maritime shipping by implementing the Emissions Trading System (ETS) are underway at the International Maritime Organization (IMO). This study seeks to investigate the impact of ETS on short-term fleet deployment decisions of liner shipping companies. Considering pragmatic scenarios of demand uncertainty and transshipment, we extend state-of-the-art maritime operational planning under climate policies and propose a fleet planning model accounting for carbon emissions to evaluate the decision-making nuances of a liner company. Numerical experiments are conducted to analyze ETS implementations with varying policy design parameters for their efficacy in mitigating emissions and potential impact on stakeholders. The findings indicate that, for liner shipping which is cross-regional by nature, regional ETS implementations are inadequate due to carbon leakage; the efficacy of open ETS policies is limited, particularly when carbon prices are low; strict carbon purchase caps integrated with robust carbon price-setting mechanisms are critical to designing an effective ETS. • Regional Emissions Trading Systems are limited in their decarbonizing efficacy. • Low carbon prices complemented with strict carbon caps induce reduction in CO 2. • Preference for strict carbon caps or high carbon prices depend on policy timeline. • Transition to LNG is not ideal at current free carbon allowance allocation levels. • Incentive schemes must be devised to encourage transition to intermediate fuels. [ABSTRACT FROM AUTHOR]

Tradeable permit systems for allocating rights to impact the environment have become an important part of the regulatory toolkit over the last 35 years. Informed by elegant neoclassical economic thought, these regulatory markets promise lowest-cost environmental benefit by delegating decision-making to market participants. This article examines tradeable permits systems, including cap-and-trade carbon markets, tradeable water quality permits, and individual transferable quotas for fisheries, to understand the actual outcomes of attempts to transfer environmental governance to markets. Drawing on heterodox economic thought and the neoliberal natures literature, this article examines the institutional forms tradeable permit systems engender in conjunction with a neoclassical definition of ‘market’ to provide an internal critique of environmental marketization. In general, tradeable permit systems do not facilitate highly liquid financial markets that might signal the increasing importance of regulatory markets as an accumulation strategy for capital. Instead, market-based regulation tends to behave rather differently, acting as performance standards, quotas, or environmental taxes. The article concludes by reflecting on the political possibilities afforded by the recognition that regulatory markets, for the most part, bear little resemblance to high-flying financial markets. [ABSTRACT FROM AUTHOR]

In this study, we analyze the price dynamics of carbon certificates that are traded under the European Union's Emissions Trading System (EU-ETS). With the aim of investigating the joint relations among carbon, electricity, and fuel prices, we model historical prices using several methods and incorporating structural changes, such as econometric time series, regime switching, and multivariate vector autoregression models. We compare the results of the structural model with the results of traditional Markov switching and autoregressive models with breaks and present performance analysis based on the mean average percentage error, root mean squared error, and coefficient of determination. According to these performance tests, models with regimes outperform the approaches where breaks are defined using ex ante dummy variables. Moreover, we conclude that among regime switching models, univariate models are better than multivariate counterparts for modeling carbon price series for the analysis of both in-sample and out-of-samples. [ABSTRACT FROM AUTHOR]

To better establish a unified carbon market in China, this study evaluates the effect of current carbon trading policy and further investigates the relationship between such policy that is published during the second phase of Shanghai Environment and Energy Exchange (SEEE) and Shanghai Emission Allowance (SHEA) price. We aim to analyze whether these policies can improve the operation efficiency of current carbon market. By the Mean Reversion Test, Cox-Ingersoll-Ross (CIR) Model, and Event Study Method, we first analyze the potential price discovery function of SHEA products, thereby describing the transmission channel of current policy to SHEA price. Then we examine the effect of carbon policies published in different periods on their corresponding SHEA price. By the Auto-correlation Test and CIR simulation, we find that 3/4 of all auto-correlation values are less than 0 after Apr. 2017, and the minimum cumulative error is 31.3792 under the supply and demand channel. These findings imply that SHEA price has the discovery function at the middle and end of trading period, and the current policy affects SHEA price through its effect on the fundamentals of supply and demand. Further, more than 60% of all r-values (r-value that reflects the response of price to policy) are less than 1, which implies that the published policy will improves future SHEA price. Accordingly, we argue that SEEE belongs to a policy-oriented market, and the change of carbon price is closely related to emission allocation policies. In this case, China's government should further push forward the smooth operation of current carbon market by the aid of incentive policy in the coming period. [ABSTRACT FROM AUTHOR]

Recently, a new feedback control policy, named the Environmental Hedging Point Policy, to control the inventory and production was introduced. In this policy, inventory, backlog, and emission costs were taken into account. Employing low-emitting technology, this study aimed at developing this policy in order to integrate three objectives of costs, emissions, and customers’ satisfaction. Two prominent environmental control rules, namely command-and-control and cap-and-trade were examined by applying the proposed policy. To solve the problem, a new simulation-based optimization method combining OptQuest, experimental design, variance analysis, and response surface methodology, was conducted. This method improved the procedure of finding the second-order responses. Compromise solutions of a multiple-response problem were calculated thanks to the desirability function approach. Accordingly, the Pareto optimal surface was generated by changes in the weights or shape factors. The effectiveness of introduced policy was examined by sensitivity analysis. Thereupon, the shadow prices for both low-emitting technology and emission penalty were obtained. The results showed that considering shadow prices imposed by the regulatory authorities, the cap-and-trade rule was more effective in comparison with other rules. [ABSTRACT FROM AUTHOR]

To achieve carbon emissions control targets, policymakers often need a basket of policies to account for the complexity of abatement. The instruments in the policy mix are often interconnected. It is of great importance to study how different abatement policies perform in practice--in other words, to evaluate the effectiveness of the abatement policy mix. This paper builds a multisector partial equilibrium model and then studies the policy effectiveness using data from two energy-intensive sectors in China, namely, the iron and steel sector and the cement sector. The results show clear evidence that these policies interact, and the policy mix is not a simple aggregation but rather differs across sectors, which leads to fundamentally different scenarios in terms of energy savings, emissions reductions and production behaviors. Energy-savings subsidies can increase production and profit with a lower equilibrium level of carbon prices, whereas output-based rebating of allowances reduces production and is associated with higher carbon prices. [ABSTRACT FROM AUTHOR]

Subglobal and subnational greenhouse gas policies are often thought to be less effective than comprehensive policies as production and emissions of trade exposed industries may move from the regulated to the unregulated regions, a process referred to as “leakage”. Leakage negates some emission reductions from the regulated regions. We use detailed electricity generation and transmission data to show that this is the case for the Regional Greenhouse Gas Initiative (RGGI), a CO 2 cap-and-trade program for the electricity sector in select Northeastern U.S. states. More specifically, our results indicate that RGGI induced a reduction in coal-fired generation in RGGI states and an increase in NGCC generation in RGGI-surrounding regions. This finding suggests that the pollution haven hypothesis holds for state-level variation in environmental policy, even when compliance costs are low. [ABSTRACT FROM AUTHOR]

In our analytical general equilibrium model, polluting inputs can be substitutes or complements. We study a tax increase on one pollutant where the other faces a tax or permit policy. Our solutions highlight key parameters and welfare effects with gains from abatement plus positive or negative co-benefits from other pollutants in the covered and uncovered sectors. We demonstrate several ways taxes and permits differ. First, the change in taxed pollutant depends on whether the other pollutant faces a tax or permit policy. Also, only with a tax on the other pollutant can a co-benefit arise. The sign of co-benefits depends on the sign of cross-price elasticities and on whether the other pollutant's price is above or below marginal damages. Finally, the other pollutant's tax or permit policy also affects emissions in the uncovered sector (leakage). In a numerical illustration of carbon tax in U.S. electricity, we calculate emissions of CO 2 and SO 2 in both sectors. For plausible parameters, co-benefits are larger than direct [ABSTRACT FROM AUTHOR]

The article discusses several decisions issued by U.S. federal and state courts between October 1, 2016, and September 30, 2017 concerning toxic tort and environmental law. It reports several cases including "Petitpas v. Ford Motor Co.," that held no duty was owed to an allegedly exposed worker's girlfriend; Supreme Court's distinction between misfeasance and nonfeasance in "Riedel v. ICI Americas Inc.; and "Georgia Pacific, LLC v. Farrar" related to product containing asbestos.

To derive the supply and demand issues during the first phase of the Korea Emission Trading Scheme (KETS), we investigated the excess or shortage, and the carry-over inflow of carbon emission permits for all of the domestic industries and major corporations. In particular, this study explored the supply and future prospects of offset credits, as well as the allocated permits, by forecasting the inflows of offset credits using the amount of certified reduction in domestic boundaries and overseas sources. We observed both the supply and demand of permits and changes in carbon dioxide (CO2) emission levels during the first phase (2015-2017) by comparing the estimated emission levels and the total permit supply. The results showed that permits were either in surplus or insufficient, depending on the sub-sector, and that a surplus in the supply of permits would occur if companies do not carry over more than 70 million tons of permits to the next period. [ABSTRACT FROM AUTHOR]

The European-Union Emissions Trading System (EU-ETS) is a cap and trade scheme that requires the industries participating in the program to obtain allowances to cover their carbon emissions. Energy Intensive Industries claim that this system puts their European plants at an economics disadvantage compared to facilities located outside the EU. As a direct consequence, industries may relocate their production activities in unregulated countries, leading to the so-called carbon leakage effect. In order to curb this effect, several policies have been devised, including grandfathering of CO 2 allowances and border tax adjustment. This paper investigates the impact of these two policies on the cement sector, with a particular focus on the Italian market, particularly prone to carbon leakage. The analysis is based on an oligopolistic partial equilibrium model with a detailed technological representation of the market. The model is a Generalized Nash Equilibrium Problem that accounts for the interactions of cement companies. Simulations show that neither the grandfathering nor the border tax adjustment fully solve the carbon leakage problem because cement companies modify their cement and clinker trade strategies according to the measure applied in order to avoid or reduce their carbon costs. [ABSTRACT FROM AUTHOR]

Since the beginning of the millennium, heavy industrial companies in the EU must face the threat related to duty of emissions trading. The aim of this paper is to assess an impact of selected indicators of the emissions trading system (EU ETS) - number of grandfathered permits (allowances) to a company for free and emissions price for different type of permits. That is enabled by the parameterization and sensitivity analysis of the simple linear programming model which maximizes the total profit margin of the company. Analyses in this paper are performed using the data of one real iron and steel producing company in the Czech Republic. The influence of the chosen factors is explored for the second and the available part of the third trading phase of the EU ETS. [ABSTRACT FROM AUTHOR]

Cap and trade schemes often use a policy of adjustable allowance supply with the intention to stabilize the market for allowances. We investigate whether these policies deliver with a focus on allowance prices. Motivated by existing policies, we study schemes that rely on either the allowance price (price measures) or the surplus of unused allowances (quantity measures) to adjust supply in a dynamic cap and trade market. Compared to emissions trading under a fixed cap, we find that price measures stabilize allowance prices. Quantity measures can be destabilizing. Though phrased in the context of changing interest rates, our results warn more generally against the belief that quantity measures are a suitable instrument to promote a stable cap and trade market. [ABSTRACT FROM AUTHOR]

The article focuses on China's plan to launch a national emissions trading scheme (ETS). Topics discussed include the possibility that China will seek to link its ETS with other ETS schemes, the various forms of linkage and their different effects, and signs that China and the European Union are very likely to cooperate in the field of emissions trading.