Carbon Price and Firm Greenhouse Gas Emissions

Drawing on recent enthusiasm in the carbon markets, I examine the impact of carbon prices on firm greenhouse gas (GHG) emissions using a sample of 1,591 firms from 23 European countries. The findings indicate that an increase in price decreases corporate GHG. At hypothesized higher pricing levels, I document that the effect of pricing on corporate GHG emissions is negative. The negative impact of appreciated carbon price is present in other harmful gases such as sulphur and volatile organic compounds (VOCs). The findings from this study are robust to alternative econometric specifications and further sample selection criteria