The efficiency of CO2 market in the phase III EU ETS: analyzing in the context of a dynamic approach

Nexus of COVID-19 and carbon prices in the EU emission trading system: evidence from multifractal and the wavelet coherence approaches

In this paper, we analyzed the role of carbon pricing as a vital tool for achieving the sustainable energy transition and discussed policy implications for reaching this goal in the era of the COVID-19 pandemic. To investigate the connection and cross-correlation between COVID-19 cases and carbon price returns in EU ETS, we applied two novel approaches: the multifractal detrending moving average cross-correlation (MF-X-DMA) and the wavelet coherence techniques. The coverage of data is from 2 March 2020 to 19 March 2021. The results of the MF-X-DMA method show that the cross-correlation is substantial and negatively correlated. Moreover, the results imply the presence of multifractal cross-correlations and that a significant change in the number of COVID-19 cases further impacts carbon price fluctuations. Concerning the wavelet coherence method results, we can also find a strong (negative) relationship between selected variables, and this strong correlation is observed throughout the whole study period. In addition, we observe that in the first wave of the COVID-19 outbreak, the changes in the COVID-19 cases are leading the CO₂ price returns (particularly in the 16-32 time scale). The results of this study can have significant implications for policymakers and contributions for environmental experts and investors.

Manufacturers' product line strategies and environmental impacts under carbon cap and trade policies

This paper explores the impact of carbon cap-and-trade policies and consumer low-carbon preferences on the choice of manufacturers' product lines. We further investigate the optimal decisions of manufacturers under different product line strategies. Moreover, we analyze consumer surplus, environmental impact, and social welfare under different product line strategies. The results show that producing low-carbon and ordinary products is the optimal product line strategy for manufacturers. In addition, we demonstrate that when considering carbon cap-and-trade policies and consumers' low-carbon preferences, the consumer surplus, environmental impact, and social welfare when manufacturers produce low-carbon products are always better than in other scenarios. Furthermore, our research results also show that with the increase of carbon trading prices, the consumer surplus and social welfare when manufacturers choose to produce low-carbon products are always better than in other scenarios. However, we find that the environmental impact is not always outperforming when manufacturers choose a product line that produces low-carbon products than other scenarios.

Sustainable Blueprint: Do Stock Investors Increase Emissions?

The lack of agreement on climate policies among stock-market investors has raised significant concerns about GHG-emission levels, likely reflected in asset pricing. This study uses annual data sourced from the World Bank from 1980 to 2019 to examine whether stock-market investments increase GHG emissions in Organization for Economic Co-operation and Development (OECD) countries. The study employs the panel-standard fixed effects and the Arellano-Bover and Blundell–Bond dynamic methods and shows that stock-investor confidence is critical for emissions reduction in OECD countries. Additionally, the results highlight the potential mechanism through which the stock market can influence emissions in the OECD countries. We recommend that investors re-evaluate the emissions criteria before selecting long stock portfolios. Additionally, there is a need for policymakers to promote the preservation of environmental quality by carefully redesigning policies for stock-market investments.