Authors: TH Tang, HXH Bao
Year: 2024
Journal / publisher: Cities
DOI: 10.1016/j.cities.2023.104713
Abstract
This study explores the impact of political uncertainty on sustainable urban development by examining carbon emission trading systems (ETS) in four major markets in China (Beijing, Shanghai, Guangdong, and Hubei) from 2014 to 2022. As an alternative to carbon taxes, carbon ETS markets have become increasingly popular due to their success in reducing greenhouse gas emissions. However, their effectiveness is often hindered by political instability and uncertainty. Utilising logistic regression and AR(1)-GARCH estimations, we identify a negative relationship between political uncertainty and carbon trading volume. Our study also reveals significant varia- tions in the responses of these markets to political uncertainty. The paper contributes to the understanding of how ETS markets operate in a complex and constantly changing political environment. We suggest that poli- cymakers need to consider the impact of political uncertainty on carbon trading when designing and imple- menting urban policies that promote sustainable development. Additionally, our research contributes to the development of urban policies that can be effectively implemented in both developed and developing regions.