Has the outbreak of COVID-19 changed the carbon market?

I-Chun Tsai ()
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I-Chun Tsai: National Tsing Hua University

Economic Change and Restructuring, 2025, vol. 58, issue 1, No 17, 38 pages

Abstract: Abstract This paper infers that the behavior of governments and the public in the face of the pandemic may have reshaped the carbon reduction process and carbon reduction caused by the COVID-19 pandemic can be long-lasting. To test whether the behavioral changes have caused carbon markets to move towards more sustainable goals after the outbreak of COVID-19, this paper examines whether pandemic severity and regulatory policies had a direct and immediate or indirect structural effect on the carbon market. The study uses daily transaction data in the Beijing carbon market from January 22, 2020, to June 4, 2021, to identify factors influencing the carbon market. The empirical results indicate that regulatory policies directly and immediately affected the carbon market. By contrast, changes resulting from the pandemic had a more profound effect and resulted in structural changes to the volatility of carbon market prices and volume. Governments should encourage and provide incentives that promote carbon-free consumption and behavior so that the carbon-reduction effect of the pandemic can persist after the economy has recovered.

Keywords: COVID-19; Carbon market; Carbon reduction; Pandemic severity; Regulatory policies (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10644-024-09851-2

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