Assessing the Effectiveness of Carbon Trading Mechanisms in Promoting Carbon Reduction: A Case Study of the US

Abstract

This study examined the effectiveness of the cap-and-trade policy adopted by California by exploring the effectiveness of the program in meeting the intended goals of reducing carbon emissions within the energy sector. The study used a deductive approach to analyse and empirically test the data using regression analysis. Data was sourced from government agencies in the fifty states and included per capita carbon emissions, carbon intensity, energy intensity, and GDP. The time frame for analysis was 2008 to 2021. The findings show that the cap-and-trade program implemented in California has resulted in a decrease in per capita CO2 emissions in the energy sector. The study also found that the effects of cap-and-trade did not intensify in the subsequent years after its adoption. Despite the limitations of data quality and availability, focus on per capita emissions and exclusion of carbon leakages, the findings of this study are crucial for economic policy development and implementation on carbon emissions.