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Liu, Y. Koenker, R. Download references. We would like to thank Prof. Samuel Fankhauser and Dr. Joachim Schleich from the Fraunhofer Institute for Systems and Innovation Research for their insightful comments on this manuscript. You can also search for this author in PubMed Google Scholar. Peer review information Nature Communications thanks the anonymous reviewer s for their contribution to the peer review of this work.

Reprints and Permissions. Assessing the impact of ETS trading profit on emission abatements based on firm-level transactions. Nat Commun 11, Download citation. Received : 06 September Accepted : 08 April Published : 29 April Regional Environmental Change Energies By submitting a comment you agree to abide by our Terms and Community Guidelines.

If you find something abusive or that does not comply with our terms or guidelines please flag it as inappropriate. Advanced search. Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily. Skip to main content Thank you for visiting nature. Download PDF. Subjects Climate sciences Environmental social sciences Social sciences. Abstract The EU Emission Trading System ETS is the oldest and currently the largest carbon market in the world, but its purpose of stimulating carbon emissions via trading profits remains unexamined.

Introduction Carbon emission trading has been proposed as a market-based policy instrument to reduce greenhouse gas GHG emissions mainly CO 2 at the least possible cost. Results Correlating profits and abatements Figure 1 presents the complete quantile distribution.

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Full size image. Table 1 Definitions and statistics of the quantiles. Full size table.

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Discussion Our analysis provides three important findings based on the unique complete firm-level transaction data set. Data availability The data sets generated during or analyzed in this study are available from the corresponding author upon any reasonable requests. Code availability The data, R codes of the statistical analysis, and the results are available from the corresponding author upon any reasonable requests.

References 1. Article Google Scholar 5. Article Google Scholar 6.

• Emissions trading - Wikipedia.
• Policy Interactions – Implementing Effective Emissions Trading Systems – Analysis - IEA.
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Article Google Scholar 7. Google Scholar 8. Article Google Scholar 9. Article Google Scholar Acknowledgements We would like to thank Prof. View author publications. Ethics declarations Competing interests The authors declare no competing interests. Additional information Peer review information Nature Communications thanks the anonymous reviewer s for their contribution to the peer review of this work.

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

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Close banner Close. Responsiveness to cost changes: It is not clear which approach is better. It is possible to combine the two into a safety valve price: a price set by regulators, at which polluters can buy additional permits beyond the cap. Responsiveness to recessions: This point is closely related to responsiveness to cost changes, because recessions cause a drop in demand.

Under cap and trade, the emissions cost automatically decreases, so a cap-and-trade scheme adds another automatic stabilizer to the economy - in effect, an automatic fiscal stimulus. However, a lower pollution price also results in reduced efforts to reduce pollution. If the government is able to stimulate the economy regardless of the cap-and-trade scheme, an excessively low price causes a missed opportunity to cut emissions faster than planned. Instead, it might be better to have a price floor a tax. This is especially true when cutting pollution is urgent, as with greenhouse gas emissions.

A price floor also provides certainty and stability for investment in emissions reductions: recent experience from the UK shows that nuclear power operators are reluctant to invest on "un-subsidised" terms unless there is a guaranteed price floor for carbon which the EU emissions trading scheme does not presently provide. Responsiveness to uncertainty: As with cost changes, in a world of uncertainty, it is not clear whether emissions fees or cap-and-trade systems are more efficient—it depends on how fast the marginal social benefits of reducing pollution fall with the amount of cleanup e.

Other: The magnitude of the tax will depend on how sensitive the supply of emissions is to the price. The permit price of cap-and-trade will depend on the pollutant market. A tax generates government revenue, but full-auctioned emissions permits can do the same.