Comparing the impacts of carbon tax and carbon emission trading, which regulation is more effective?

Carbon pricing policies and renewable energy development: Analysis based on cross-country panel data

While studies have theoretically discussed the impact of carbon pricing on renewable energy, the practical implementation and effectiveness of these policies remain uncertain. This study empirically examines the role of carbon emissions trading and carbon tax in global renewable energy development using panel data from 196 countries and regions and employing the staggered difference-in-differences (DID) model and Bacon decomposition method. The results suggest that: (1) From the perspective of policy shocks, carbon trading has increased non-hydro renewable electricity generation by 73.32%, while carbon tax has increased it by 31.79%. This indicates that the overall impact of carbon trading on renewable energy is greater than that of carbon tax. However, the elasticity coefficients of renewable energy to carbon trading prices and carbon tax rates are 0.1801 and 0.1845, respectively, suggesting a slightly greater marginal effect of carbon tax on renewable energy compared to carbon trading. (2) Both carbon tax and carbon trading have mitigated the growth of fossil electricity and encouraged public investment in renewable energy, thereby fostering its development. (3) The influence of carbon pricing on renewable energy varies by income level; notably, the implementation of these policies in high-income countries has diminished their promotional effect on renewable energy. (4) The contribution of technological innovation to renewable energy development is smaller than that of policies including carbon trading and carbon tax, indicating that renewable energy development during the sample period was predominantly driven by policy measures. The findings indicate that the application of carbon pricing policies should be further promoted to accelerate the energy mix transition.

Contribution of the carbon tax, phase-out of thermoelectric power plants, and renewable energy subsidies for the decarbonization of Chile - A CGE model and microsimulations approach

There are various climate policies to decarbonize the energy matrix of a country. In the case of Chile, a carbon tax of 5 USD/tCO2 was initially implemented, and later, a schedule was established for the phase-out of coal-fired thermoelectric plants, all the above in the absence of subsidies for non-conventional renewable energy (NCRE). This study uses a computable general equilibrium (CGE) model and microsimulations to assess the contribution of current climate policies and other more demanding scenarios that accelerate the decarbonization of the Chilean energy matrix, considering economic, environmental, and distributional impacts. Specifically, carbon taxes are simulated with and without complementary climate policies (phase-out of coal-fired power plants and NCRE subsidies). The results show that the scenarios that combine the three climate policies generate a greater decrease in greenhouse gas emissions (40.4% ∼ 57.5%). Besides, the drop in GDP is more pronounced when coal-fired thermoelectric plants phase out (0.3% additional), and NCRE subsidies contribute to moderately reducing emissions. However, NCRE subsidies reduce the negative effect on households' expenditure and income, especially in the poorest quintile. Finally, microsimulations show marginal changes in income distribution and an increase of up to 0.4 percentage points in the poverty rate.

Global energy transition and foreign environmental regulations: Impacts on Russian regions' export volumes

This paper analyses the impacts of trading partners' environmental regulation on the export volumes of the Russian regions, using panel data covering about 140,000 observations in 84 Russian regions and 204 countries for the period 2013-2020. We employ the Gravity Model of international trade and Heckman Sample Selection methodology, with the fixed effects and random effects Poisson Pseudo-Maximum Likelihood techniques to analyse two subsamples of the Russian regions with different shares of environmentally sensitive goods in regional exports. As a robustness check, we utilize the non-parametric Driscoll-Kraay approach. The results of the econometric estimation demonstrate that environmental regulations enhance the export of regions with a high share of environmentally sensitive goods in export structure, while for the rest of the regions the environmental regulations negatively affect export volumes. The promoting effect is associated with a higher level of innovativeness of the regions and the role of the global energy transition process. We conclude that the environmental agenda is a challenge for some Russian regional exporters due to the lack of own environmental regulation, and to the specific features of the commodity and geographic structure of exports. To transform the negative impact into the positive one for all Russian regions, policy measures are necessary on the federal, regional, and company levels, encompassing environmental regulations and green development strategies, along with innovation and cluster policies, and the development of human capital and infrastructure.

Trading our way to a greener future: how environmental rights trading reduces urban carbon emissions in China-empirical analysis based on China's emission rights trading

Environmental rights trading (ERT) is considered one of the crucial instruments for environmental governance in China, accelerating urban low-carbon sustainable development. This study utilized the Chinese Emissions Trading System (ETS), which has been implemented most widely, longest, and most typical, to represent ERT and examine its contribution to urban carbon emission reduction. Through a quasi-natural experiment perspective, urban panel data were collected from 2003 to 2019, and a time-varying difference-in-differences model and moderating models were developed. The study indicates that ERT can significantly reduce carbon emissions in cities, with robust results. In addition, the carbon reduction effect of ERT varies by city region, type, and size. This phenomenon is more obvious in central and western cities and resource-based cities. Finally, a framework to strengthen the carbon reduction effect of ERT was creatively constructed. The strengthening effects of green innovation, industrial structure, and clean energy are evident. This helps provide evidence for ERT layout and extension, especially in countries with high carbon reduction needs such as China. ERT affects not only policymakers but also a greener future for every organization and individual in the city.

Market or regulation? The competition effect between green finance and environmental enforcement on environmental quality and its "dominate-follow" pattern

Current research on environmental instruments often isolates the two mainstream types, market-based and regulation-based, overlooking their real-world interactions. In response, the intensity gap variable (EII_GAP) is constructed to link various instruments into a united system. Thus, based on the spatial econometrics of the spatial panel Durbin model (SPDM), the collective effects between market- and regulation-based environmental instruments on environmental quality are explored. Moreover, the political strategies for maximizing environmental benefits are discussed. Results show that the interaction pattern between market- and regulation-based environmental instruments on environmental quality is characterized by competition rather than cooperation. A unit widening in the intensity gap leads to 17 to 18% and 12 to 18% units of environmental quality improvement in local and adjacent areas, respectively. Furthermore, the "dominate-follow" approach as the most effective mode for maximizing environmental effects is proposed. This study recommends employing one type of instrument as the dominant while the other as the auxiliary. In provinces where one kind of environmental instrument takes domination, the environmental quality could be increased by around 8 to 113% after taking another contrary instrument as the auxiliary.

Quantifying the energy-material-pollution nexus in a typical fine chemical industry: A sustainable development-oriented support for collaborative emission reduction

The fine chemical industry is currently facing challenges in energy saving, material conservation, and pollution reduction due to the dual policy pressure of precise system management and collaborative pollution and carbon reduction. However, the interweaving of materials and energy input-output was not well understood due to the incomplete coverage and the lack of a generic framework. Therefore, a methodology based on the energy-material-pollution (E-M-P) coupling nexus was proposed to quantitatively assess multi-level coupling. According to the selected generic 32 coupling units, two representative glyphosate (PMG) production processes were taken as case studies. Quantification results showed that the solvent element and the material system had a higher priority. Moreover, Process 2 owned a greater optimization potential as the coupling relationship pairs were 2.55 compared to 2.32 for Process 1, and the correlation proportions of material systems reached 69.26 % and 56.92 %, respectively. In addition, assessment results indicated that Process 2 was more environmentally friendly because of the lower ecological indexes (9.7 GPt vs. 15.8 GPt) and weaker carbon footprint (CF) (1.16E+08 vs. 2.32E+08). Combined coupling nexus and environmental assessment organically, methanol had the most optimization potential and was beneficial for the measures such as solvent substitution. This work offered theory and practice guidance with demonstrative value to support the sustainable development of precise system management.

Environmental law, environmental policy stringency, and development of environmental technologies in China

China's fast industrialization and economic expansion has led to environmental degradation, prompting the government to implement a slew of environmental regulations and laws. This article examines how China's stringent environmental policies and legislation have impacted the development of environmental technology. The study's panel of Chinese companies confirmed that more stringent regulations really spurred innovation in green technology. This research lends credence to the premise that stricter environmental regulations are helpful in inspiring the development of cleaner technology that may help mitigate environmental issues. Research also shows that tighter environmental legislation increases environmental policy's effect on technological development. According to these results, environmental law may improve the efficiency of environmental policy by providing a hospitable framework for the application of technological innovation. The findings of this research have significant implications for Chinese policymakers committed to fostering sustainable development. The need of rigorous environmental rules to support comprehensive environmental policies that promote the development of greener technology is emphasized. The results shed even more light on how crucial it is to enforce environmental laws in order to ensure that environmental policies are effectively implemented. In essence, this study contributes to the expanding body of knowledge on the link between environmental policy and technical advancement by illuminating the potential for China's environmental policy and law to work together to encourage sustainable development. China's investment in green tech research and development may mitigate the environmental damage caused by its rapid economic growth.

Carbon reduction behavior of waste power battery recycling enterprises considering learning effects

The carbon reduction behavior of waste power battery recycling (WPBR) enterprises is essential for promoting resource conservation and environmental protection. Introducing the learning effects of carbon reduction research and development (R&D) investment, this study constructs an evolutionary game model between local governments and WPBR enterprises to study the behavior choice of carbon reduction. The paper explores the evolutionary process and factors affecting carbon reduction behavior choices of WPBR enterprises from internal R&D motivation and external regulation perspectives. The critical results reveal that the existence of learning effects significantly reduces the probability of environmental regulation by local governments while effectively increasing the probability of WPBR enterprises implementing carbon reduction. The learning rate index positively correlates with the likelihood of enterprises implementing carbon emissions reduction. In addition, carbon reduction subsidies considerably maintain considerably negative relation with the probability of enterprise carbon reduction behavior. The following conclusions are drawn: (1) The learning effect of carbon reduction R&D investment is the intrinsic driving force for WPBR enterprises' carbon reduction behavior, which can promote enterprises to proactively implement carbon reduction under fewer constraints of government environmental regulation; (2) Pollution fines and carbon trade prices in environmental regulation can promote enterprises carbon reduction, while carbon reduction subsidies inhibit their reduction behavior; (3) There exists an evolutionarily stable strategy between government-enterprise game only under the dynamic mechanism. The research provides insights for decision-making on enterprises' carbon reduction R&D investment and local government environmental regulation policy under carbon reduction targets.

Towards sustainable development: what carbon trading pilot policy has been done for mitigating carbon emissions and air pollution?

This study examines the impact of carbon trading pilot policy (CTPP) on carbon emissions (CO2) and air pollution (Ap) using the difference in differences method (DID) utilizing panel data from 30 Chinese areas spanning from 2008 to 2020. The results indicate that CTPP implementation can effectively decrease CO2 and Ap. CTPP can reduce CO2 and Ap through positive incentive effects that promote industrial structure upgrading and drive technological progress. Moreover, CTPP exhibits significant regional variation, with CTPP significantly reducing CO2 in both the eastern and central and western regions. CTPP do not show an effective reduction in Ap in eastern region, while effectively reduce Ap in central and western regions.

The impact of fiscal transfer payments on energy conservation and emission reduction in China: Does the development stage matter?

Fiscal transfer payments (TRANS) are the institutional supplement of Chinese-style fiscal decentralization, which is of great significance to economic development. However, the relationship between TRANS and energy conservation and emission reduction (ECER) remains to be further discussed. Using panel data of 30 provinces in China from 2003 to 2020, this study empirically examines the impact of TRANS on energy-environmental performance (EEP) from the perspectives of influence mechanism, regional heterogeneity and nonlinearity. The results show that the influence of TRANS on ECER presents an obvious U-shaped relationship, and this influence has regional heterogeneity. At the same time, the investment-driven effect, infrastructure effect and industrial structure effect are important channels through which TRANS affect ECER. The partially linear functional coefficient models show that TRANS have different effects in different development stages. With the continuous improvement of economic level and urbanization level, the promotion effect of TRANS on ECER is more and more obvious. These results indicate that the government should increase fiscal investment in ECER, and pay attention to the development stage of different regions.

The impact of electricity-carbon market coupling on system marginal clearing price and power supply cost

In this study, we assessed the impacts of the benchmark designs of emissions allowance allocation in China's national carbon emissions trading system with plant-level data and further estimated the marginal clearing price and power supply cost in Guangdong power market under electricity-carbon market coupling with unit commitment and economic dispatch model. We find that the existing allowances benchmark would result in a considerable surplus of allowances at about 222 Mt. But the benchmarking and exemplary levels on the heat rate of power supply would motivate thermal power units to reduce CO2 emissions. Under a tight balance of supply and demand in Guangdong, peaking thermal power plants will become the marginal clearing units and higher clearing prices will add to the revenue of lower cost inframarginal renewable energy power units. However, the combined impact of electricity-carbon market coupling would cause the marginal clearing price fluctuates obviously from 0 to 1159 CNY/MWh. Compared to the baseline scenario with free CO2 allowances allocation, the efficiency of thermal power utilization would decrease by 23%-59% and the net revenue per MWh power supply of coal-fired power units would decrease by 275%-325% under the stress scenario. Our study suggests that setting a more stringent allowances allocation benchmark for carbon price discovery is necessary. As electricity-carbon market coupling changes the role of coal-fired power plants to provide flexibility service and decrease their revenues, it calls for further market designs on proper reimbursement of flexible resources, under which the electricity market can effectively achieve the synergy among accommodating new energy, ensuring resource adequacy, and delivering cost efficiency. In addition, the synergy can be enhanced by formulating a tax program, which can promote renewable energy investment.