Emission allowances and environmental impact

Viera Mokrišová and Linda Machovská

Littera Scripta, 2025, vol. 18, issue 1, 27-37

Abstract: The aim of the work was to analyse the mechanism of emission allowance trading within the European Union and to assess its impact on the environment. The period chosen was from 2014 to 2021. The aim was to determine whether changes in emission allowance prices affected the level of greenhouse gas emissions and to assess whether there is a linear relationship between the price of emission allowances and the level of emissions. The validity of this relationship was examined using content analysis and regression analysis. The results of the regression analysis indicated a moderately strong positive linear relationship between the variables, which indicates that if the price of emission allowances increases, the level of emissions tends to decrease and vice versa. In the monitored period, the prices of emission allowances increased, while greenhouse gas emissions tended to decrease. The lowest prices of allowances were recorded in 2014–2017 due to their surplus, while since 2019 prices have increased due to a limitation of their quantity in circulation. The analysis showed that emissions trading has a significant impact on reducing emissions and supports investment in cleaner technologies. The biggest limitation of the work was the variability of external factors, such as economic changes and political measures, that influenced the research.

Keywords: Emission allowances; emissions trading; European Union; CO2 emissions; regression analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:rsg:littra:2025-003

DOI: 10.36708/LS.2025.I01.003

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