 Allocation or Skill? What is Driving Corporate Trading Performance in the EU ETS?Sascha Lehmann, Joachim Schleich and Jonatan Pinkse The Energy Journal, 2024, vol. 45, issue 6, 203-221 Abstract: This study empirically analyzes factors related to companies’ profits from trading emission allowances in the European Union Emissions Trading System (EU ETS) for the period from 2005 to 2017 by combining information on trading activities with company characteristics of more than 6,000 companies. The factors considered include net position (i.e., free allocation of allowances minus emissions), strategic skills (i.e., banking of allowances, timing of trading, transaction frequency, use of intermediaries), skill-related structural factors (i.e., number of installations, sector affiliation), market pressure, year, and region effects. The results from estimating a Panel Heckman Selection Model suggest that companies’ profits from buying and selling emission allowances are related to a company’s net position, banking of allowances, timing of trading, and the number of installations. The findings further indicate that companies choose the number of banked allowances efficiently, that is, they take into account the opportunity costs of selling these allowances on the market. JEL Classification: Q48, Q54, Q58 Keywords: climate policy; emissions trading; EU ETS; banking; transaction behavior; trading performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:45:y:2024:i:6:p:203-221 DOI: 10.1177/01956574241288994 Access Statistics for this article More articles in The Energy Journal |
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