Disentangling economic crisis effects from environmental regulation effects: Implications for sustainable development

With climate change becoming more severe, policy makers must impose environmental regulations that will lead firms to adopt sustainable corporate models. According to the Porter hypothesis, environmental regulation can favour the implementation of business strategies that improve economic and environmental performances. In this study, we examine how one such form of regulation, the European Union Emission Trading Scheme (EU ETS), impacts firm performance, and we subsequently widen the examination beyond the regulation to evaluate an economic crisis which could potentially confound regulation effects. We estimate a panel model with time- and firm-fixed effects for different subsamples that disentangle the effect of the EU ETS policy from the 2008 economic crisis. The results indicate that the EU ETS policy in its third phase can activate the Porter hypothesis and is effective in fuelling the implementation of sustainable corporate models by firms. However, we also find that the economic crisis neutralises the effects of the regulation on firm performance, precluding the triggering of the Porter hypothesis in severely affected firms.     

BANKING AND BORROWING IN THE EU ETS: A REVIEW OF ECONOMIC MODELLING,CURRENT PROVISIONS AND PROSPECTS FOR FUTURE DESIGN

Abstract This paper deals with the issue of banking and borrowing in the context of the European Union Emissions Trading Scheme (EU ETS) by attempting to provide a policy‐oriented unifying theoretical framework. After describing the main features of the EU ETS, the core part of the paper consists of variations of an intertemporal continuous time optimization model. Additional elements include flexibility measures currently discussed and proposed in other emissions trading systems (USA, Australia), which include the use of safety valves, minimum price auctioning or offsets from domestic or international projects.     

Eco‐efficiency: GHG reduction related environmental and economic performance. The case of the companies participating in the EU Emissions Trading Scheme

Empirical findings on eco‐efficiency are still inconsistent. Using survey data based on a sample of 283 European carbon‐intensive companies participating in the EU ETS between 2005 and 2012, this article investigates the causal relationships between the corporate environmental strategy focus, proactive GHG reductions and related environmental and economic performance, while taking into account an important contingent factor: the initial state of technology. The study's findings show that eco‐efficiency was generally not obvious among the companies during the first two trading periods. It furthermore indicates that GHG emissions were generally not reduced cost‐effectively, as companies' intrinsic values were more likely to have influenced carbon reduction related decisions to a greater degree than the economic incentives resulting from the market mechanisms of the ETS. The results not only shed light on firm behavior with regard to technology management but also provide insights for policy makers into how to stimulate more cost‐effective environmental investments. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

THE IMPACT OF THE EU EMISSIONS TRADING SYSTEM ON COMPETITIVENESS AND CARBON LEAKAGE: THE ECONOMETRIC EVIDENCE

This paper carefully surveys the econometric literature that tests for competitiveness effects and related carbon leakage caused by the EU Emissions Trading System (EU ETS). The results of this literature tell us that to date there is no evidence of the EU ETS having had widespread negative or positive effects on the competitiveness of regulated firms, nor is there evidence of significant carbon leakage. However, the paper also identifies three important caveats to this general conclusion. Firstly, the evidence we have still largely refers to the first two trading periods, namely Phases I (2005–2007) and II (2008–2012). Secondly, some heterogeneity of estimated effects is observed, but patterns, notably sectoral patterns, hardly emerge. Thirdly, very little explored is whether the EU ETS has had long-term effects on the economy via investment leakage or firm dynamics. Further empirical studies investigating these long-term effects are particularly desirable.     

Is the emperor wearing new clothes? A social assessment of the European Union 2007–2013 financial framework

ABSTRACT

Over the years, European leaders have proudly waved a social flag as one of the European Union’s (EU) constituent and differentiating elements. This commitment is assessed here through the social footprint of the European 2007–2013 multiannual financial framework among the EU countries and, worldwide, using an extended multiregional input–output model. The focus is on the quantity and the quality of income and jobs generated. We find that well-known differences among its northern, southern and eastern regions threaten the EU’s intentions for high social standards, enabling first- and second-class winners. Core EU countries account for the most of the Funds and, thus, most of the positive economic and social impacts, mainly through spillovers from peripheral regions. Beyond the EU borders, Funds expenditures induce capital compensation boosts in emerging countries not balanced by a similar labor compensation impulse. Indeed, China captures the bulk of low-skilled and temporary employment.     

A social discount rate for Turkey

Social discount rate (SDR) is a very crucial policy parameter in public project appraisals due to its resource allocation impacts. If this rate is too high, future generations will face excess financial burden since distant cash flows will become negligible. If this rate is too low, ineffective projects are chosen creating an inefficient allocation of resources. This study estimates an SDR for Turkey using the social time preference rate (STPR) approach. The elasticity of the marginal utility consumption, which is the most important component of the STPR, is estimated econometrically from a demand for food approach during the period of 1980–2008. The overall result indicates that the SDR for Turkey is 5.06%. The European Union requires evaluation of the publicly supported commercial projects in terms of the SDR; hence the findings from this study can be used as a useful policy measurement for a full EU member candidate country, Turkey.     

The impact of renewable energy diffusion on European consumption-based emissions

The amount of carbon embedded in the final consumption of goods and services in a country or region depends on the amount of goods and services consumed and the emission intensity of the production processes along global production chains. A reduction of consumption-based emissions can be achieved from both sides, a reduction in total consumption and a reduction in the emission intensity of the production processes. The power sector is one of the most carbon intensive industries along global production chains and the global deployment of renewable power generation technologies (RPGTs) is one possibility to significantly reduce emissions in this industry. This paper combines three different strands of literature, multi-regional input–output analysis, dynamic energy–economy–environment models and technological change in renewable energy (RE), to model the impact of the global diffusion of renewable energies on European consumption-based emissions. The global diffusion of RE technologies (photovoltaic and wind) depends on the development of technology costs, which are modeled using learning curves. With increasing deployment of renewables within the EU as well as increasing RD&D efforts, the EU can achieve an accelerated costs decrease for these technologies, thus fostering deployment of RPGTs at a global scale through the effect of decreasing costs. This behavior indirectly influences the electricity mix abroad, making it less carbon intensive, so that consumption-based emissions of the EU decrease.     

中国能源投资效率的测度分析

运用双边随机前沿分析方法,构建异质性双边随机模型,从内外部融资、温室气体减排等角度测度和分析中国能源投资效率。结果表明,能源工业内部融资约束和金融机构外部融资支持对能源投资具有正反两个方面的显著影响,两者的综合影响为负,这将导致能源投资往往低于最优水平。山西、陕西等资源型地区的能源投资—现金流敏感性不强,未来应以传统能源建设为主;江苏、浙江等沿海发达地区能源自给率偏低,应重点发展可再生能源。     

Assessing policy interventions to stimulate the transition of electric vehicle technology in the European Union

The European Union (EU) is taking steps to gradually reduce its reliance on fossil fuels, as well as to decarbonize the entire energy and automotive systems, with the goal of reaching carbon neutrality by 2050. As such, road transportation plays a fundamental role in this process. Internal combustion engine (ICE) vehicles are to be slowly decommissioned as other powertrain systems arise for multiple reasons, from greenhouse gas (GHG) emissions to urban air quality. To change both the technological and consumer landscapes, governments must act through policymaking intervention. Electric vehicles (EVs) provide a significant opportunity to address this issue, and as such, the current work aims at assessing national-level policy intervention within the EU regarding the EV transition. This study employs the ELECTRE (ELimination Et Choix Traduisant la REalité - ELimination and Choice Expressing the REality) TRI-nC method to classify 27 EU Member States (MSs) regarding their governance in terms of EV technology promotion. Overall, financial incentives still have a big effect on EV deployment, since those countries with greater concern on this topic were generally better classified than the rest. Finally, charging infrastructures also play a critical role, either making or breaking the deployment of EVs, leading to the worst classification of MSs with very few charging points per 100 thousand urban inhabitants.     

金融生态环境对金融业及区域经济发展效应分析——以中原经济区金融生态环境的成效及问题为例

本文以中原经济区金融生态环境的成效及问题为例,分析了金融生态环境对金融业发展的直接效应以及金融生态环境对经济发展的间接效应,认为优化金融生态环境对改善中原经济区金融结构、提高金融效率具有重要的战略意义。同时,提出了强化政府监管职能,减少政府对金融的直接干预,加快建立信用体系,规范金融生态的信用秩序,加强政府与金融部门、企业的合作,促进信息平台建设等对策建议。     

Global Warming Disclosures: Impact of Kyoto Protocol Across Countries

The Kyoto Protocol that went into effect in February 2005 set limits on the amount of greenhouse gas (GHG) emissions. We document in this study that firms from countries ratifying the Protocol and setting limits on GHG emissions (i.e., European Union [EU] countries, Canada and Japan) are associated with higher GHG disclosures compared with firms in the United States, which has not ratified the Protocol. Additionally, we document that firms from India, which has not set any limits on GHG emissions, make even less GHG disclosures than firms from all other countries covered in this study. Our findings also show that GHG disclosures are greater for Canadian and Japanese firms compared with firms from the EU countries and that they also differ somewhat across EU firms. These findings suggest that ratification of the Protocol and limits on emissions improve pollution disclosures. In the absence of Protocol ratification, mandatory disclosure requirements may be needed to ensure adequate and reliable pollution disclosures.     

Industrial structure distortion and urban ecological efficiency from the perspective of green entrepreneurial ecosystems

Improving the entrepreneurial ecosystem plays an important role in the transformation and upgrading of traditional industries, and achieving the coordinated development of economy and environment among cities is important for improving the quality and efficiency of the entrepreneurial ecosystem. Using the panel data of 286 prefecture-level cities in China from 2003 to 2016, this study adopts the global reference super efficiency slack-based measure model considering undesirable output to measure China's urban ecological efficiency. In addition, the spatial lag model is used to investigate the impacts of industrial structure advancement and rationalization on ecological efficiency, and the impacts of the heterogeneity of industrial structure and economic development under the distortion of resource dependence on ecological efficiency. The results show that: every one-unit increase in the advancement of industrial structure will lead to a 0.0741 unit increase in ecological efficiency, but the high dependence on natural resources will inhibit the promoting effect of industrial structure advancement on ecological efficiency, and such an inhibiting effect will weaken with the improvement of economic development level; moreover, the influence coefficient of industrial structure rationalization on ecological efficiency is not significant, nor is it affected by the natural resource dependence and the level of economic development. This paper hereby proposes that in the process of promoting green entrepreneurial activity at present, the Chinese government should give full play to the role of industrial structure advancement on improving ecological efficiency, actively break through the constraints restricting the impact of industrial structure rationalization, reduce excessive dependence on resource industries, improve the level of regional economic development, and strive to transform resource-intensive industries to technology-intensive industries to support the sustainable development of a green entrepreneurship ecosystem.     

Do Greenhouse Gas Emissions Affect Financial Performance? – an Empirical Examination of Australian Public Firms

Previous studies that have attempted to relate corporate environmental performance to financial performance have generated conflicting results. This paper presents the findings of a study on the relationship between greenhouse gas (GHG) emissions and the financial performance of Australian corporations. Using multiple regression models and data from a sample of 69 Australian public companies, this paper finds a positive correlation between GHG emissions and corporate financial performance. By testing the statistical significance of GHG emission factors in determining company Tobin's q, this study finds that a stronger Tobin's q often correlates with higher GHG emissions across all industry sectors. This finding is contrary to evidence found in previous studies conducted in other countries. The positive correlation found in this study could be explained with reference to the unique economic structure and development of Australia, particularly its dominant mining industry. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

R&D subsidies and productivity in eastern European countries

This paper shows that R&D subsidy policies at the European Union (EU) and national levels stimulated labor productivity in Central and Eastern European countries (CEEC) in the years after their entry to the EU. However, the average impact of national funding on labor productivity was higher for countries in the Western control group than in the CEEC sample. EU R&D subsidies compensated the CEEC in part for the greater innovation impact of Western economies. Although they crowded out some R&D subsidies by local governments at the country level, the EU subsidies crowded in many national and local subsidies at the firm level. Local/regional state innovation aid to enterprises encouraged no increase in labor productivity in all but one of the sample CEEC countries. These impacts are assessed in a sequential structural econometric model estimated using Eurostat’s collection of Community Innovation Surveys covering the years 2006–2014.     

Climate Change and Mandatory Carbon Reporting: Impacts on Business Process and Performance

As part of their annual directors' report, UK‐listed companies are now required to disclose their greenhouse gas emissions and account publicly for their contributions to climate change. This paper uses this mandatory carbon reporting to explore wider debates about corporate social responsibility and the purpose, practice, and impacts of such non‐financial reporting. Empirically, it combines documentary analysis of the carbon reporting practices of 176 large firms listed in the FTSE100 and/or subject to the UK government's adaptation reporting power with 60 interviews with stakeholders involved in carbon reporting. Firms disclose their emissions in response to financial incentives, social pressure and/or regulatory compulsion. In turn, rationales shape whether and how carbon reporting influences internal business processes and performance. The importance of reporting to the bottom line varies by sector depending on two variables – energy intensity and economic regulator status – yet there is limited evidence that carbon reporting is driving substantial reductions in emissions. Findings suggest reasons for caution about hopes for ‘nudging’ firms to improve their environmental performance and social responsibility through disclosure requirements.     

Input,Output, and Environmental Management Productivity: Effects on Firm Performance

Firms invest considerable resources to control any of their operations that may have environmental impacts in an attempt to reduce such impacts but also generate economic value. Various studies of the basic creation or destruction of monetary value through environmental performance offer contradictory evidence. Therefore, the present study proposes a new definition of environmental management as the transformation of inputs (resources assigned) into outputs (valuable results). Both inputs and outputs should be taken into account to explain financial outcomes; further consideration should also include a third aspect, namely, ‘environmental management productivity’, which describes the relationship between the outputs and inputs of environmental management. Empirical analyses of Spanish firms with a certified environmental management system subject to the European Union's CO₂ emissions trading system provide evidence that all three aspects must be considered in combination to achieve a more comprehensive view of the impact of environmental management on financial performance. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

No direct influence of EU on domestic consolidation and reform: two fiscal ‘hardliners’, Netherlands and Estonia

ABSTRACT

In the Netherlands and Estonia, the European Union (EU) did not exert direct influence on domestic fiscal consolidation. They managed to resolve their fiscal crises and balance their budgets without external financial assistance, thanks to strict fiscal discipline. Yet, domestic consolidations in both countries were to some extent influenced by the EU. The Netherlands was subject to excessive deficit procedure. Estonia was indirectly influenced because of its top priority to join the Eurozone. This paper begins with a conceptual look at EU influencing. Then, fiscal discipline and consolidation in the Netherlands and Estonia are explored, especially their similarities and differences.     

Real income convergence and the patterns of financial integration in the EU

We analyse real income convergence among the EU28 countries throughout 1995–2017 and the relationship with the convergence patterns of financial systems. We apply the nonlinear latent factor model of Phillips and Sul (2007, 2009) to real incomes and the IMF financial development indices for financial markets and financial institutions (Svirydzenka, 2016), and identify convergence clubs endogenously. We have several results. First, income disparities narrowed significantly over the last twenty years; yet, the growth convergence process lost momentum triggered by the global financial crisis and countries legacies shaped up asymmetries that have crystallised. Second, countries' financial systems exhibit high fragmentation, especially for financial markets, with the new EU member states at a lower financial development, confirming the existence of a two-tier Europe. Overall, the convergence patterns for real incomes and financial development are strongly correlated. Finally, the financial structure matters and market-oriented economies feature higher long-run growth, indicating the need to implement pan-European policy actions that increase the opportunities of risk diversification, enhance capital raising and channel large-scale financing to firms.     

The global financial crisis: Lessons for European integration

The EU's limited fiscal capacity has proven to be the most critical constraint in responding to the global financial crisis in a coordinated manner. The EU does not have enough resources to rescue the troubled financial institutions and member states. This leads to a nationalization of rescue operations, which undermines the Single European Market and requires IMF involvement with respect to member states in distress. The EU must also complete the lacking elements of the Single European Market architecture (such as European financial supervision) and help in strengthening global policy and regulatory coordination.     

A NEW SUT CONSOLIDATION METHOD TESTED BY A DECOMPOSITION OF VALUE ADDED AND CO2 EMBODIED IN EU27 EXPORTS

This paper develops a method to consolidate national supply–use tables (SUTs) into a single supra-regional SUT. The method deals with mirror trade statistics problems, such as the different valuation of imports and exports, and it corrects for double-counting re-exports. The method is tested by means of a decomposition of value added and CO₂ emissions embodied in EU27 exports to third countries. When the national SUTs for the period 2000–2007 are used, neglecting intra-European Union spillover and feedback effects results in an underestimation of the embodied value added of 12–15%. Not consolidating the national tables properly leads to a further underestimation of 11–16%. With these underestimations removed, EU27 foreign exports still only explain around 11% of EU27 Gross Domestic Product, whereas they explain 17% of the EU27 CO₂ emissions. Hence, the income benefits of these exports are, in relative terms, considerably smaller than their CO₂ emission cost.