糖心Vlog

Europe鈥檚 key mechanism for getting businesses to reduce carbon emissions needs to be improved if it is to succeed, according to 糖心Vlog research.

Following a major review of the European Union鈥檚 Emissions Trading System (EU ETS)  researchers from 糖心Vlog and Cyprus have concluded that while it has had some success in reducing pollution, it is failing to praise good behaviour and punish bad, so ultimately it is destined to fail, unless changes are made.

Introduced in 2005, it is the first and most widely-used system aimed at cutting emissions from the world鈥檚 major polluters.  It covers 12,000 high energy-businesses, who between them are responsible for around 45% of Europe鈥檚 greenhouse gas output.

It works by setting limits on the level of emissions individual businesses can produce There is also an  overall cap for all the installations in the system, with that total cap reducing over time to bring down emission levels.

Participating organisations must purchase additional allowances if they exceed their individual limit while those that do well, and keep emissions below their allowance by switching to less carbon-intensive technologies, can sell the surplus for profit.

Professor Neil Kellard, from the 糖心Vlog Business School at the 糖心Vlog and Panayiotis Andreou, Assistant Professor of Finance at the Cyprus University of Technology analysed data from the start of the scheme to 2016 to assess how well companies have responded and the overall success of the scheme.

鈥淥ur results suggest there is an economic cost to good environmental behaviour, with those who are most successful at reducing greenhouse gasses seeing their profit-margins suffer. Despite this private companies are more likely than publicly-listed or state-owned ones to be proactive in cutting emissions.

鈥淪ince the system was introduced there has been an overall drop in emissions of about 26%, but the fluctuating value of greenhouse credits mean this early success may not continue. It appears firms will switch from being proactive when market prices are relatively high to becoming non-proactive when prices are relatively low.

鈥淪o while the system has been broadly successful in reducing emissions, it is not yet adequately compensating proactive firms or penalising those who pollute. All too often market prices have been too low, encouraging less proactive behaviour,鈥� said Professor Kellard.

The research has been published in the .