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The purpose of this paper is to overview the development of China's emission trading, which is transforming environmental policy measures from traditional command and control regulations to business‐led decision making within government initiated environmental markets, and investigates the main factors that affect China's policy making with regards to further climate changes.

This paper is based on the authors' review of the literatures on emissions trading program in China and their critical analysis.

Initially China's environmental protection policies were focused principally upon the reduction of sulfur dioxide (SO₂) emissions for improving air quality. Since the authorization of the Kyoto Protocol in 2002, project‐based activities such as Clean Development Mechanism producing carbon credit developed rapidly. However, the implementation of carbon dioxide emission trading is still under discussion and research is much inferior to that of SO₂ emission trading. The barriers of and suggestions for designing future emissions trading market are also discussed.

This review helps to raise awareness and understand possible scenarios for emission trading in China.

This paper aims to identify under which circumstances company internal emission trading schemes (IETS) are applied and to examine their actual effects on corporate greenhouse-gas (GHG) emissions.

Using contingency theory, factors are identified that influence corporate decisions to introduce an IETS. To examine the effects of IETSs, emissions data for a sample of large German companies is used for linear regression modelling.

The paper finds that today, IETSs are mainly applied by companies with high levels of emissions that are subject to external trading schemes. The current use of IETSs seems to be primarily driven by the interest to reduce emissions cost-efficiently. Testing the effects of IETSs reveals that they are able to reduce corporate GHG emissions significantly.

The effects of IETSs are only tested for companies subject to an external emission trading scheme. Furthermore, the analysis does not distinguish between different types of IETSs. Future research should address the issue of whether the reductions observed also hold true for companies not subject to external trading schemes and should formulate recommendations on how IETSs should be designed.

The paper informs practitioners about the potential benefits of IETSs.

For the first time, the effects of IETSs are tested for companies subject to an external emission trading scheme. The analysis suggests that a new academic debate on IETSs is needed as the introduction of external emission trading schemes has not rendered IETSs redundant.

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.

Carbon trading mechanism has been adopted to foster the green transformation of the economy on a global scale, but its effectiveness for the power industry remains controversial. Given that energy-related greenhouse gas emissions account for most of all anthropogenic emissions, this paper aims to evaluate the effectiveness of this trading mechanism at the plant level to support relevant decision-making and mechanism design.

This paper constructs a novel spatiotemporal data set by matching satellite-based high-resolution (1 × 1 km) CO₂ and PM_2.5 emission data with accurate geolocation of power plants. It then applies a difference-in-differences model to analyse the impact of carbon trading mechanism on emission reduction for the power industry in China from 2007 to 2016.

Results suggest that the carbon trading mechanism induces 2.7% of CO₂ emission reduction and 6.7% of PM_2.5 emission reduction in power plants in pilot areas on average. However, the reduction effect is significant only in coal-fired power plants but not in gas-fired power plants. Besides, the reduction effect is significant for power plants operated with different technologies and is more pronounced for those with outdated production technology, indicating the strong potential for green development of backward power plants. The reduction effect is also more intense for power plants without affiliation relationships than those affiliated with particular manufacturers.

This paper identifies the causal relationship between the carbon trading mechanism and emission reduction in the power industry by providing an innovative methodology for identifying plant-level emissions based on high-resolution satellite data, which has been practically absent in previous studies. It serves as a reference for stakeholders involved in detailed policy formulation and execution, including policymakers, power plant managers and green investors.

This study aims to provide an estimation of carbon dioxide (CO₂) emission abatement costs in China’s industry sector during the period of 2006-2010, and additionally provide an ex-post estimation of CO₂ abatement cost savings that would be realized if carbon emission permits trading among different industry sectors of 30 provinces in China during the same period were allowed, to answer the question that whether the industrial carbon emission abatement cost can (partially) be recovered from carbon emission trading in China.

The joint production framework associated with the environmental technology is utilized for formulating the models for estimating abatement costs and simulating emission permits trading scheme. Several data envelopment analysis-based models that could deal with both the desirable and undesirable outputs within the above framework are utilized for abatement cost saving estimation. The weak disposability assumption and variable returns to scale assumption are applied in the modelling.

In China’s industry sector, during 2006-2010, the estimated CO₂ emission abatement cost was 1,842 billion yuan, which accounts for 2.45 per cent of China’s total industrial output value; the emission abatement cost saving from emission permits trading would be 315 billion yuan, which accounts for 17.12 per cent of the emission opportunity abatement cost; and additional 1,065.95 million tonnes of CO₂ emission reductions would be realized from emission permits trading, and this accounts for 4.75 per cent of the total industrial CO₂ emissions.

The estimation is implemented at the regional level, i.e. the emission permits trading subjects are the whole industry sectors in different Chinese provinces, because of the data limitation in this study. Further estimation could be implemented at the enterprise level to provide a deeper insight into the abatement cost recovery from emission permits trading.

The estimation models and calculation process introduced in this study could be applied for evaluating the efficiency and effectiveness of pollutant emission permits trading schemes from the perspective that whether these market-based abatement policy instruments help to realize the potential abatement cost savings.

To the best of the authors’ knowledge, no study has provided the estimation of CO₂ emission abatement cost and the estimation of CO₂ abatement cost saving effect from emission permits trading for China’s industry sector. This study provides the first attempt to fill this research gap.

This paper seeks to investigate sulphur dioxide (SO₂) emissions trading practice in China and discusses what it might reveal about the suitability of using emissions trading to achieve carbon reductions in China.

The paper explores the Taiyuan SO₂ emissions trading program case through interviews with key participants in the scheme. The interview questions are developed from the literature on emissions trading practice and theory.

The Taiyuan SO₂ emissions trading program does not seem to be functioning anything like a theoretically ideal model and this brings into question proposals to introduce emissions trading in China. Limitations would seem to be the semi‐free market, the weakness of the legal system and the nature of business‐bureaucracy interactions.

This case study is geographically limited, as are most emissions trading schemes in China and the number of interviewees is relatively small. There was also little historical quantitative data because of the limited records kept in the enterprises and so there is a high reliance on interviewees' recollection.

The evidence suggests that a national carbon trading scheme may not be suitable in China in the short run because the implementation of the program and emissions trading market are very important.

This is the first paper investigating the actual performance of SO₂ emissions trading practice in China and also the first one discussing the suitability of using emissions trading to achieve carbon reductions in China based on the existing practice.

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.

Environmental problems such as CO₂ (Carbon Dioxide) emissions have seriously affected the development of the steel industry, which has urged the industry to adopt a more effective emission reduction policy. This paper aims to analyze the impact of various CO₂ emission reduction policies combinations on the economic benefits and environmental changes of the steel industry and to determine the scope of application.

To compare the impact and applicable implementation conditions, a production decision game model that incorporates these two policies has been constructed. Short-, medium- and long-term constraints are set on the emission reduction indicators and the indicators’ changes under various scenarios are compared.

In the case of a single emission reduction policy, the carbon trading (CT) mechanism is better than the carbon tax mechanism. The mixed carbon trading mechanism is superior to the mixed carbon tax mechanism in terms of total output and subsidies, but worse in terms of overall social welfare, producer surplus and macro losses.

This paper constructs multiple emission reduction and production backgrounds and discusses the impact of the comprehensive implementation of these policies, which is practically absent in previous studies. It is in line with the current industrial policy for stable production and environmental protection and also provides a reference for the formulation of detailed policies in the future.

A new financial asset (Allotment Trading Unit or ATU) that allows a firm to pollute was issued to a number of Chicago firms in 2000 as part of a cap‐and‐trade model to reduce emissions in the Chicago area. A model of this market was developed to enable us to: 1.) Estimate equilibrium tradable credit prices and quantities and calculate compliance costs for comparison with traditional environmental regulation; 2.) Estimate the consequences for prices and quantities of introducing changing emitter costs; and 3.) Estimate the impacts on prices and quantities of changing market features such as auctioning tradable credits instead of a free allocation, introducing spatial constraints, and changing the emissions cap. The model's results on the price determination of this new financial asset are of interest to accountants and financial analysts. A dated bankable ATU credit has a one‐year life expectancy, but future tradable credits can be bought or sold for use at the appropriate future date. It is an intangible asset that should be disclosed, measured and valued. The valuation to place on this asset is an important research topic in finance and accounting and various valuation approaches are discussed to handle the short‐term and long‐term price paths.

This paper aims to review the literature on carbon trading from the perspective of evolution, finds out the evolution path of these literatures and gives out the future research hotspots in this field.

Uses visualization tools (CiteSpace and HistCite) to systematically categorize the literature on carbon-trading schemes in the Web of Science core collection from 1998 to 2018, comprehensively analyzes carbon-trading schemes from four dimensions, namely, discipline evolution, keyword evolution, citation cluster evolution and citation path evolution.

Research on carbon-trading schemes has a specific development and evolution path along four dimensions, namely, in the discipline dimension, the largest change lies in the mathematics pointed to by at least four different disciplines; the keyword evolution dimension shows a gradual deepening emphasis on coordinated development; citation clusters identify three major clusters – carbon prices, China’s carbon trading, carbon market and supply chain; and citation paths identify three major evolutionary paths, the most important of which shows that “What affects carbon price?” has changed to “What is the impact of carbon prices?”

Reveals the evolution path of carbon trading research studies and proposes four possible development directions for carbon-trading scheme research, which is helpful for future carbon trading-related research and serves as a reference for the promotion of and improvements in carbon-trading schemes.