Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network
Abstract The European Union Emissions Trading System (EU ETS) is designed to promote cost-effective carbon emission reductions through allowance trading. However, observed trade patterns suggest potential inefficiencies. This study conducts a province-level analysis of the EU ETS trade network of al...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Nature Portfolio
2025-06-01
|
| Series: | Nature Communications |
| Online Access: | https://doi.org/10.1038/s41467-025-59913-w |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1850137944168333312 |
|---|---|
| author | Andrea Flori Alessandro Spelta |
| author_facet | Andrea Flori Alessandro Spelta |
| author_sort | Andrea Flori |
| collection | DOAJ |
| description | Abstract The European Union Emissions Trading System (EU ETS) is designed to promote cost-effective carbon emission reductions through allowance trading. However, observed trade patterns suggest potential inefficiencies. This study conducts a province-level analysis of the EU ETS trade network of allowances, demonstrating that trades predominantly occur between entities within the same country and sector, even in recent phases of the system. To systematically examine the mesoscale structure of the trade network while accounting for geographical and sectoral homophily, we introduce a community detection framework based on the gravity model and optimal transport theory. By disentangling home and sectoral biases, we identify trade communities that align with cultural dimensions. Our findings reveal a complex interplay between geographical, economic, and cultural factors that shape carbon allowances trade patterns. These findings contribute to a deeper understanding of structural constraints within the EU ETS trade network and inform strategies for improving its cost-effectiveness. |
| format | Article |
| id | doaj-art-df6c47953e77443d83faeb01f9b0bd6a |
| institution | OA Journals |
| issn | 2041-1723 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Nature Portfolio |
| record_format | Article |
| series | Nature Communications |
| spelling | doaj-art-df6c47953e77443d83faeb01f9b0bd6a2025-08-20T02:30:42ZengNature PortfolioNature Communications2041-17232025-06-0116111710.1038/s41467-025-59913-wCarbon trade biases and the emerging mesoscale structure of the European Emissions Trading System networkAndrea Flori0Alessandro Spelta1Department of Management, Economics and Industrial Engineering, Politecnico di MilanoDepartment of Economics and Management, University of PaviaAbstract The European Union Emissions Trading System (EU ETS) is designed to promote cost-effective carbon emission reductions through allowance trading. However, observed trade patterns suggest potential inefficiencies. This study conducts a province-level analysis of the EU ETS trade network of allowances, demonstrating that trades predominantly occur between entities within the same country and sector, even in recent phases of the system. To systematically examine the mesoscale structure of the trade network while accounting for geographical and sectoral homophily, we introduce a community detection framework based on the gravity model and optimal transport theory. By disentangling home and sectoral biases, we identify trade communities that align with cultural dimensions. Our findings reveal a complex interplay between geographical, economic, and cultural factors that shape carbon allowances trade patterns. These findings contribute to a deeper understanding of structural constraints within the EU ETS trade network and inform strategies for improving its cost-effectiveness.https://doi.org/10.1038/s41467-025-59913-w |
| spellingShingle | Andrea Flori Alessandro Spelta Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network Nature Communications |
| title | Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network |
| title_full | Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network |
| title_fullStr | Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network |
| title_full_unstemmed | Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network |
| title_short | Carbon trade biases and the emerging mesoscale structure of the European Emissions Trading System network |
| title_sort | carbon trade biases and the emerging mesoscale structure of the european emissions trading system network |
| url | https://doi.org/10.1038/s41467-025-59913-w |
| work_keys_str_mv | AT andreaflori carbontradebiasesandtheemergingmesoscalestructureoftheeuropeanemissionstradingsystemnetwork AT alessandrospelta carbontradebiasesandtheemergingmesoscalestructureoftheeuropeanemissionstradingsystemnetwork |