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Abstract: Using newly constructed sector-specific carbon price data, we study the response of CO2 emissions to carbon pricing policies for a cross-country panel covering 1990–2016. We explicitly estimate the distinct effects of policy introduction (regardless of the price level) and effects attributable to changes in the price level, finding that omission of either element can bias estimation. Applying the generalized synthetic control method to estimate average treatment effects in five sectors based on a linear factor model with interactive fixed effects, we find that the introduction of carbon pricing has reduced annual growth in total aggregate CO2 emissions by 1 percentage point on average relative to imputed counterfactuals, with most abatement occurring in the electricity and heat sector (1.5 percentage points relative to counterfactuals). Decomposing average treatment effects to identify average interannual sector-specific CO2 emissions elasticities, we find a small and imprecisely estimated semi-elasticity (a 0.06 %age point reduction in emissions growth per average $1/tCO2). Using our semi-elasticity estimates, we simulate the response of future global emissions to plausible carbon price trajectories, finding that the global average CO2 price is estimated to need to exceed $175/tCO2 for current estimated introduction and price effects to be sufficient to trigger emission reductions consistent with the Paris Agreement. The study constructs a novel dataset of emissions-weighted carbon prices across five sectors for 39 countries, spanning 1990–2016. The analysis explicitly distinguishes between the impact of merely introducing a carbon price and the impact of changes in its level, finding that omission of either element can bias estimates. The introduction of carbon pricing is found to reduce the annual growth rate of total CO₂ emissions by 1 percentage point, with the electricity and heat sector seeing the largest reductions (1.5 percentage points).•The estimated semi-elasticity of CO₂ emissions to the carbon price is 0.06 percentage points per additional $1/tCO₂, with statistically significant reductions observed in the manufacturing sector. The study simulates future global emissions under different carbon price trajectories, finding that a global carbon price exceeding $175/tCO₂ is likely needed to align with the Paris Agreement goals.•Results suggest that the mere introduction of carbon pricing has a substantial effect, while higher price levels yield only marginally larger emissions reductions at currently observed price levels.
Abstract: The global food system significantly contributes to climate change through carbon emissions. This article examines how policy interventions influence food affordability and supply, with a particular focus on climate change and dietary patterns. Analyzing 122 articles on the agricultural supply chain, it explores strategies to address affordability and supply challenges. Rising global temperatures threaten food stability, highlighting the importance of agricultural policies in lowering production costs and improving farmer resilience and motivation to ensure a more sustainable and secure food system. Climate change manifests diverse effects, including food security in regions less reliant on agriculture, with rainfall patterns being significant in northern and central areas. The food production process, a significant contributor to the industry's carbon emissions, exacerbates global warming. Thus, minimizing this carbon footprint is imperative for achieving sustainable development goals. The transition towards low-carbon footprint food is influencing environmental, economic, and policy dimensions. Achieving a low-carbon future in food production and consumption requires a comprehensive approach. Food choices significantly impact the environmental footprint of the food system, intertwining with climate change, land use, and dietary habits. Effective mitigation policies are crucial for future economic prosperity. Sustainable diets emerge as a critical global issue in the 21st century, with excess production of high-energy foods juxtaposed with insufficient output of fruits and vegetables. Despite these challenges, global agriculture can meet the current world population's dietary needs with its existing production capacity. [Display omitted] •Industrialization and urbanization boost food wastage.•Policies crucial to climate resilience in agriculture.•Climate hazards threaten food security.•Investing in rural areas enhances societal development.•Reducing food waste is vital for global food challenges.
Abstract: The building sector offers an important lever for reducing carbon emissions, with carbon pricing considered as one essential policy instrument to unleash this potential. Yet, carbon pricing in residential buildings faces challenges, particularly in rental housing, as the financial burden and thus the incentives to reduce carbon emissions may be distributed differently between landlords and tenants, presenting a principal–agent problem that may lead to conflict and low public support. Using extensive survey data from about 12,000 households, we analyze the support for different concepts to share the cost burden owed to carbon pricing between landlords and tenants. We particularly examine the role of perceived cost, effectiveness, and fairness and experimentally study the impact of revenue use and carbon price level on public preferences. Our results suggest that the price level and revenue use hardly affect support, whereas tenancy – and thus self-interest – as well as perceived fairness of the sharing concept strongly correlate with preferences. Overall, a sharing mechanism according to the energy efficiency of the building is the most preferred cost allocation among our participants. •We study public support for different carbon price cost burden sharing concepts.•Four different concepts to share the cost between landlords and tenants are studied.•We combine experimental and correlational methods to understand preferences.•Self-interest and perceived fairness are strongly correlated with preferences.•Cost sharing based on building energy efficiency is most popular.
Abstract: This study explores the intraday price discovery and volatility spillover in the European Union Emission Trading Scheme (EU-ETS) for the fourth commitment period.•The study uses VECM, component share, Hasbrouck information share, modified information share, and spillover index model to examine price discovery and volatility spillover.•The study reveals the higher contribution of ECX futures in price formation.•Further, volatility transmission occurs predominantly from ECX futures to the spot market. This study investigates the price discovery and volatility spillover between ECX spot and futures prices using high-frequency data for the fourth phase of EU-ETS. The analysis reveals the higher contribution of ECX futures in price formation. Furthermore, volatility spillover analysis shows that volatility transmission occurs predominantly from ECX futures to the spot market, making the ECX futures market a shock (information) transmitter and the spot market a shock (information) receiver in net terms. The informativeness of ECX futures in carbon pricing can be attributed to higher liquidity, higher trading volume, and the presence of informed institutional traders in the ECX futures market.
Abstract: An anatomy identifies four main components of actual or proposed Emissions Trading Systems (ETS). A different assemblage of options delivers different ETS exemplars. Two main exemplars are identified. Contrary to current policy discourse, both ETS exemplars cannot co-exist. The ETS anatomy offers insight and structure for thorough analysis and evaluation of existing ETS. An anatomy identifies four main components of actual or proposed Emissions Trading Systems (ETS): (1) Pursued policy goals with the ETS instrument; (2) Public authority allocations of permits to the regulated participants; (3) Carbon emissions price levels; and (4) Participants’ abatement expenses dependent on the ready availability of affordable abatement techniques or of low-carbon innovation opportunities. These components cover a range of options. A different assemblage of options delivers different ETS exemplars. Two main exemplars are identified. The actual EU ETS is highly successful in meeting the goal of low financial burdens on EU industry, thereby precluding carbon leakage. The other exemplar opts for high carbon emissions prices in the EU to induce industrial innovations towards a low-carbon economy. Incumbent industrial interests oppose this exemplar. Contrary to current policy discourse and to wishful proposals, both ETS exemplars cannot co-exist. ETS anatomy offers insight and structure for thorough analysis and evaluation of existing ETS, resulting in context–specific and appropriate designs of the carbon trading systems.
Abstract: Environmental Policy and Investment Location: The Risk of Carbon Leakage in the EU ETS. Novel green-field data offer new insights on the effect of the EU ETS on cross-country investments. Identification is ensured with a firm-level exposure variable obtained leveraging a model of firms' production. Investments react to carbon pricing and that the effect is stronger for more emitting firms. The aggregate investment effect is small, not justifying the past compensations offered as free allowances.
Abstract: The reduction of carbon emissions is a key element in the fight against the climate crisis. Freight transportation emissions account for 5–8% of global carbon emissions and are among the costliest to abate. This study examines the impact of the European Union Emissions Trading System (EU ETS) on green transportation technology development as a pathway to emission reduction through the lens of the Porter Hypothesis. For this we combine patents from PATSTAT with carbon emission data from EUETS.info of non-financial manufacturing, trade and transportation firms regulated under the EU ETS. First, we use a SARIMA interrupted time series analysis on all patent filings classified under the Y02T category for green transportation technologies from 2000 to 2020. Our findings indicate that stringent EU ETS reforms in 2013 are associated with an increase in the share of green transportation patent filings relative to general green patents. Second, we use a firm-year panel dataset of 4,064 firms and 53,470 firm-years to calculate fixed-effects quantile regression models with lagged responses of green patenting on carbon emission reduction. We demonstrate that green transportation patents are associated with firm-level carbon emission reductions, with effects growing over time. In contrast, general green patents do not exhibit the same impact. Our results offer empirical support for the Porter Hypothesis, adding to the research how stringent environmental regulations can drive sector-specific technological advancements and contribute to climate goals. These findings inform policymakers on the effectiveness of stringent market-based environmental instruments in fostering targeted green innovation and achieving emission reductions. EU ETS introduction and first tightening had no impact on green transportation patenting trends. The 2013 reform led to a sustained rise in relative green transportation patent filings. Firms shifted focus towards transportation technologies to meet stricter emission regulations. Firms filing green transportation patents reduced carbon emission up to 8,863 tons. Emission reductions strengthened over time.
Abstract: This paper examines the distributional impacts from (i) harmonizing prices for carbon dioxide emissions across sectors and EU countries and (ii) using alternative rules for carbon revenue distribution. We develop a numerical multi-country multi-sector general equilibrium model of the EU-27 economy which resolves household income deciles, based on micro-survey data on expenditure and income, and markets for fossil fuels, electricity, and (EU-wide and national) tradeable emissions rights. We find that carbon price harmonization yields efficiency gains at the EU level. The distributional effects between countries vary and depend largely on the redistribution of carbon revenues. Based on the rules currently in place in Phase IV of the EU ETS, efficiency gains flow disproportionately to low-income countries. Within-country incidence is progressive or neutral for most countries when revenue redistribution is ignored, and is not much affected by carbon price harmonization. Per-capita-based revenue redistribution rules lead to strong progressive outcomes and yield gains for low-income households. Evaluating different policy options using a social welfare function that incorporates inequality aversion suggests that there is no trade-off between efficiency and equity in harmonizing carbon prices in the EU economy. •We use a multi-region CGE model with households disaggregated into income deciles. We examine various scenarios for harmonizing EU carbon prices. We analyze three different ways of recycling carbon pricing revenue. We find no trade-off between equity and efficiency of carbon price harmonization. Current across-country & per-capita within-country recycling protect those with low income.
Abstract: As a major global manufacturer and exporter of raw materials, China may not be significantly affected by the implementation of the EU Carbon Border Adjustment Mechanism (CBAM) in the short term. However, as other developed economies follow and continuously expand the mechanism coverage of industries, it may have widespread and far-reaching implications for exports of related products from developing countries. In light of the global shift towards green and low-carbon transformation, China must effectively address the CBAM by speeding up the promotion of green and low-carbon initiatives through enhanced policies and legal frameworks. This requires addressing issues such as comprehensive supervision challenges in the carbon footprint of supply chain systems, incomplete policy mechanisms such as carbon pricing, inadequate legal systems and standards, and challenges in policy enforcement and coordination. To address these issues, this paper proposes enhancing carbon emission management systems, gradually expanding the scope of China's carbon emission trading, and promoting data transparency. Legislation and institutional arrangements for internalizing low-carbon costs should also be strengthened, to promote low-carbon development in all industries, setting specific low-carbon targets and requirements for production and operations. •CBAM will significantly impact high-carbon industries in China in the long term.•China must confront challenges in carbon oversight, pricing mechanisms, legal deficiencies, and policy enforcement alignment.•Improving carbon emission management systems, expanding emission trading, and increasing data transparency are essential.•Enacting the "Carbon Peak and Carbon Neutrality Promotion Act", sector-specific decarbonization, and carbon tax regulations is key to internalizing low-carbon costs and aligning with global trends.
Abstract: The carbon emission trading scheme (ETS) is one of the most important market-incentive green finance policies aimed at mitigating carbon emissions. Employing the staggered implementation of the Chinese carbon ETS across regions and a triple difference approach, we find that carbon ETS has a significantly positive impact on green investor entry. This finding is further verified through dynamic effect analysis and stacked regression. The positive effect of carbon ETS on green investor entry is driven by improved green performance, intensified media coverage, and enhanced environmental disclosure. Furthermore, this effect is more pronounced when firms have higher analyst following, lower financial constraints, lower product pricing power, and are located in regions with higher levels of green finance development. Overall, our findings provide insightful implications for the construction of a unified national carbon ETS in emerging markets. Carbon emission trading scheme has a significantly positive impact on green investor entry. The impact is driven by improved green performance, intensified media coverage, and enhanced environmental disclosure. We explore the effect of analyst following, financial constraints, product pricing power, and green finance development.
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