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The purpose of this study is to investigate which of the two carbon allowance allocation methods (CAAMs), i.e. grandfathered system carbon allowance allocation (GCAA) and baseline system carbon allowance allocation (BCAA), is more beneficial to capital-constrained supply chains under the carbon emission allowance repurchase strategy (CEARS).

Adopting CEARS to ease the capital-constrained supply chains, this study develops two-period game models with manufacturers as leaders and retailers as followers from the perspective of profit and social welfare maximization under two CAAMs (GCAA and BCAA), where the first period produces normal products, and the second period produces low-carbon products.

First, higher carbon-saving can better use CEARS and achieve a higher supply chain profit under the two CAAMs. However, the higher the end-of-period carbon price is, the lower the social welfare is. Second, when carbon-saving is small, GCAA achieves both economic and environmental benefits; BCAA reduces carbon emissions at the expense of economic benefit. Third, the supply chain members gain higher profits and social welfare under GCAA, so the government and supply chain members are more inclined to choose GCAA.

By analyzing the profits and total carbon emissions of capital-constrained supply chains under GCAA and BCAA, this study provides theoretical references for retailers and capital-constrained manufacturers. In addition, by comparing the difference in social welfare under GCAA and BCAA, it provides a basis for the government to choose a reasonable CAAM.

This study investigated the visibility of carbon emissions allowances accounting in the financial reports of 32 clean development mechanism (CDM) projects in the UAE to uncover the obstacles to setting consistent standards for carbon emission accounting. As carbon emissions are monetized as credits, consistent accounting standards can aid decision-makers in the development of carbon emission mitigation strategies.

This study used a grounded theoretical framework for exploring the terms used in the policy documents of international accounting bodies regarding accounting standards and guidelines for carbon emission credits. Raw qualitative data were gathered, and an inductive approach was used by analyzing documents from various sources using the qualitative data text analysis software QDA Miner 6.

The findings showed that the financial statement reports of the corporations did not include disclosure of the carbon credit account. This omission was due to the lack of global standardization of carbon credit accounts and emission allowance recognition. This may hinder the production of a comprehensive report containing accurate and valuable financial information relevant to all stakeholders.

The study is among the first to use a grounded theoretical framework to investigate whether corporations are applying common standards and guidelines for carbon emissions accounting.

The development of low-carbon production is impeded by the investment costs of green technology research and development (R&D) and carbon emission reduction while facing the uncertain risk of emission reduction investment. With the government's carbon emission constraints, green manufacturers implement the advance selling strategy to increase both profit and reduction level. However, few studies consider the consumer's green preference and emission constraints in advance selling market and spot market independently. The authors' paper investigates the optimal strategies of advance selling pricing and reduction effort for green manufacturers to maximize profits.

The authors' paper designs a stochastic model and investigates the manufacturer's optimal strategies of advance selling price and emission reduction efforts by categorizing different purchasing periods of low-carbon consumers. With the challenges of uncertain demand and government's emission constraints, the authors' develop the non-linear optimization model to investigate the manufacturer's profit-oriented decisions.

The results show the government's carbon constraints cannot influence the manufacturer's profit, but the consumer's low-carbon preference in the advance selling period can. Interestingly, the manufacturer will make fewer reduction efforts even when the consumers have stronger environmental awareness. In addition, the increasing consumer price sensitivity will exacerbate the profit loss from mandatory emissions reduction. Overall, for achieving a win–win situation between emission reduction and profit growth, green manufacturers should not only consider the sales strategies, market demand, and government constraints in a low-carbon market, but also pay attention to the uncertainty of green technology innovation.

With the consideration of the government's carbon emission constraints, uncertain demand, and low-carbon consumer's preferences, the authors' study innovatively incorporates the joint impacts of advance selling strategy and emission reduction effort strategy and then differentiates between two cases that pertain to the diverse carbon emission regulations.

In the era of climate change, industrial organizations are under increasing pressure from consumers and regulators to reduce greenhouse gas emissions. The purpose of this paper is to examine the effectiveness of product mix as a strategy to deliver the low carbon supply chain under the cap-and-trade policy.

The authors incorporate the cap-and-trade policy into the green product mix decision models by using game-theoretic approach and compare these decisions in a decentralized model and a centralized model, respectively. The research explores potential behavioral changes under the cap-and-trade in the context of a two-echelon supply chain.

The analysis results show that the channel structure has significant impact on both economic and environmental performances. An integrated supply chain generates more profits. In contrast, a decentralized supply chain has lower carbon emissions. The cap-and-trade policy makes a different impact on the economic and environmental performances of the supply chain. Balancing the trade-offs is critical to ensure the long-term sustainability.

The research offers many interesting observations with respect to the effect of product mix strategy on operational decisions and the trade-offs between costs and carbon emissions under the cap-and-trade policy. The insights derived from the analysis not only help firms to make important operational and strategic decisions to reduce carbon emissions while maintaining their economic competitiveness, but also make meaningful contribution to governments’ policy making for carbon emissions control.

This study examines the investment opportunities available for individual investors in the carbon emissions market. Volume, investment correlations, location of trade, return volatility, and price discovery are examined for the Barclays carbon emissions exchange traded note (ETN) launched in July of 2008 and traded in U.S. markets. Our main findings indicate this new type of asset evidences diversification benefits for individual investors. Its main source of volatility and price discovery is the underlying European futures carbon market.

This paper aims to investigate the value relevance of the European Emission Allowance (EUA) return and volatility on the equity value of the top listed European Power Generation Firms for the three trading phases of the European Emission Trading Scheme.

The authors use the multifactor financial market model over the period 2005-2016 on daily basis for the return relevance relationship, whereas time series models such as autoregression moving average and generalized autoregressive conditional heteroskedasticity are applied on a weighted average portfolio of the sample firms to test serial correlation and volatility of returns.

The findings are novel in which a positive and significant relevance of EUA return on equity return is shown; however, a vanishing effect is seen as one moves to further trading phases. Another remarkable finding is that the return relationship remains constant until a certain level in EUA price then inverts. Finally, the authors present that EUA is considered a systematic factor as firm and country-specific features are not statistically significant.

At policy level, these findings signal policymakers for an appropriate design of the future trading phases in which they achieve the balance between public interests, as climate risk mitigation by reducing emissions, and the private interests of the market players to support innovative changes.

To the authors’ knowledge, this study would be the first to offer recent and comprehensive findings on the economic and financial implications of the European Emission Trading Scheme for the three trading phases. Additionally, the research offers time series robustness check besides the standard regression analysis and shows that there is an optimal EUA price that triggers polluters’ decision on emission and generation.

The purpose of this paper is to analyse the certified emission reduction (CERs) disclosure and reporting practices followed by Indian firms.

The study is based on all 131 Indian firms who received the CERs under the CDM of UNFCCC. The content analysis is being used to examine the recognition, measurement, presentation and disclosure of CERs within the financial statements.

The study found that there is generally no uniformity of accounting for CERs. The firms adopted a diversity of accounting practices. More specifically, majority of companies (40.46 per cent) recognised CERs as the other income; a very high non-disclosure rate (91.60 per cent) for valuation of CERs inventories was found as only four companies (3.05 per cent) provided accounting treatment for CERs inventories at lower of cost or net realisable value followed by three companies (2.29 per cent) accounted for these inventories at Net realisable value at the end of the reporting period; similarly, a very high non-disclosure rate (92.36 per cent) for how companies account for expenses incurred in earning these credits was found.

The study will be useful for a wide array of audiences ranging from accounting standard setter to the auditors. The present analysis is based on secondary data, as we examined only annual reports of the sample companies to know how they recognise their earned CERs within the financial statements. So, we did not cover the opinions of various key persons of companies like an accountant, auditors etc. which could be a limitation of this study in validating CERs disclosure practices followed by the Indian firms.

To the best of the author's knowledge, the present study is a first of its kind to analyse the carbon credit disclosure practices in the context of a developing country.

This article purports to show that an adequate anti-money laundering (AML) regime must be integrated into the carbon emissions market industry in order for it to function effectively, meet its intended goals, and prevent criminals from developing innovative methods to take advantage of particular vulnerabilities this unique market type has created.

This article discusses the formation of the international carbon emissions marketplace. It posits that critical to the formation and effective operation of any carbon emissions trading market is the simultaneous coexistence of an AML regime preventing criminals from taking advantage of legislative deficiencies. Lastly, the article formulates and analyzes emerging criminal typology threats to which current, developing, and future carbon emissions markets are and will be subject.

Under the EU ETS, effective AML safeguards were not initially included in the implementation and formation of the EU's carbon emissions trading market, subjecting it to numerous threats and abuses from criminals. The lack of an effective AML regime has resulted in novel and unique criminal typology threats that are currently emerging and need to be addressed to prevent abuses in new and existing carbon emissions trading markets.

The EU has recently started addressing its lack of effective AML safeguards in its carbon emissions trading market. As such, the adequacy of legislative developments needs to be examined over time. Additionally, because many of the emerging criminal typologies identified are based on recent and limited data, further research on the extent of criminality that is actually occurring is recommended.

Because emerging criminal typology threats in carbon emissions trading markets has not been researched at the scholarly level, this article is unique and has substantial value to the AML community.

The purpose of this paper is to examine the impact of structural breaks on the conditional variance of carbon emission allowance prices.

The authors employ the symmetric GARCH model, and two asymmetric models, namely the exponential GARCH and the threshold GARCH.

The authors show that the forecast performance of GARCH models improves after accounting for potential structural changes. Importantly, we observe a significant drop in the volatility persistence of emission prices. In addition, the effects of positive and negative shocks on carbon market volatility increase when breaks are taken into account. Overall, the findings reveal that when structural breaks are ignored in the emission price risk, the volatility persistence is overestimated and the news impact is underestimated.

The authors are the first to examine how the conditional variance of carbon emission allowance prices reacts to structural breaks.

This paper aims to find optimal emission reduction investment strategies for the manufacturer and examine the effects of carbon cap-and-trade policy and uncertain low-carbon preferences on emission reduction investment strategies.

This paper studied a supply chain consisting of one manufacturer and one retailer, in which the manufacturer is responsible for emission reduction investment. The manufacturer has two emission reduction investment strategies: (1) invest in traditional emission reduction technologies only in the production process and (2) increase investment in smart supply chain technologies in the use process. Then, three different Stackelberg game models are developed to explore the benefits of the manufacturer in different cases. Finally, this paper coordinates between the manufacturer and the retailer by developing a revenue-sharing contract.

The manufacturer's optimal emission reduction strategy is dynamic. When consumers' low-carbon preferences are low and the government implements a carbon cap-and-trade policy, the manufacturer can obtain the highest profit by increasing the emission reduction investment in the use process. The carbon cap-and-trade policy can encourage the manufacturer to reduce emissions only when the initial carbon emission is low. The emission reduction, order quantity and the manufacturer's profit increase with the consumers' low-carbon preferences. And the manufacturer can adjust the emission reduction investment according to the emission reduction cost coefficient in two processes.

This paper considers the investment of emission reduction technologies in different processes and provides theoretical guidance for manufacturers to make a low-carbon transformation. Furthermore, the paper provides suggestions for governments to effectively implement carbon cap-and-trade policy.