Assessment of the European Emissions Trading System’s Impact on Sustainable Development

Abstract

This study explores the interaction between the emission trading system and the Sustainable Development Goals. Using an empirical analysis of a sample of European installations covered by the Emission Trading System from 2016 to 2021, we assessed how the system internalized the costs of carbon emissions across economic sectors and analyzed its impact on achieving the Sustainable Development Goals. The results revealed that while the increased efficiency of the emissions trading system had positive effects on environmental taxation and the reduction in economic losses due to climate change, challenges persist in natural resource use and energy dependence. This study offers new insight into the carbon ability pricing policies to properly allocate environmental costs. This study highlights the importance of integrating complementary policy instruments to strengthen effectiveness, given the link between the selected sustainable development and circular economy variables. The results provide stakeholders and policymakers with essential information for optimizing environmental policies and developing integrated approaches. If well implemented, such policies can effectively contribute to the fight against climate change and promote sustainable development by reducing social and environmental costs.

Can the Carbon Emissions Trading Pilot Policy Improve the Ecological Well-Being Performance of Cities in China?

“…The carbon emissions trading policy (CETP), which utilizes market mechanisms to encourage the reduction of emissions and energy conservation and accelerate environmentally friendly and low-carbon transformation and development, has become a popular policy tool around the world as countries seek to reduce greenhouse gas emissions. The European Union Emissions Trading System (EU ETS) is currently the largest carbon market in the world, covering over 11,000 power plants and industrial sites in 31 countries [7]. With reference to the establishment of the EU-ETS, China identified seven trading pilot regions nationwide, covering 37 prefectural-level municipalities, and opened the markets one after another in June 2013, formally kicking off the prelude to the development of China's carbon emissions trading from scratch.…”