Carbon Emissions Trading and Environmental Protection: International Evidence

23 Pages Posted: 26 Oct 2022 Last revised: 14 Apr 2023

See all articles by Jennie Bai

Jennie Bai

Georgetown University - McDonough School of Business; National Bureau of Economic Research (NBER)

Hong Ru

Nanyang Business School, Nanyang Technological University

Multiple version iconThere are 2 versions of this paper

Date Written: October 2022

Abstract

We study how the implementation of emissions trading systems (ETS) impacts emissions reductions and the usage of renewable energy using a panel sample of the largest 100 countries worldwide. Exploiting the cross-country variations in ETS implementations, we show that ETS adoption materially reduced greenhouse gas (carbon dioxide) emissions by 12.1% (18.1%). Moreover, ETSs reduced overall emissions by cutting fossil fuel usage, such as coal, by 23.70% while boosting the usage of renewable energy by 61.59%, on average. In contrast, the introduction of carbon taxes has a less effective impact on emissions reduction and fails to boost the usage of renewable energy.

Suggested Citation

Bai, Jennie and Ru, Hong, Carbon Emissions Trading and Environmental Protection: International Evidence (October 2022). NBER Working Paper No. w30587, Available at SSRN: https://ssrn.com/abstract=4259498

Jennie Bai (Contact Author)

Georgetown University - McDonough School of Business ( email )

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HOME PAGE: http://www.jenniebai.com

National Bureau of Economic Research (NBER) ( email )

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Hong Ru

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
(+65) 67904661 (Phone)

HOME PAGE: http://https://hongru.mit.edu/

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