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Journal Article

Understanding carbon trading: Effects of delegating CO2 responsibility on organizations’ trading behaviour

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Rodriguez Lopez, J. M., Engels, A., & Knoll, L. (2016). Understanding carbon trading: Effects of delegating CO2 responsibility on organizations’ trading behaviour. Climate Policy. doi:10.1080/14693062.2015.1119096.

Cite as: http://hdl.handle.net/11858/00-001M-0000-0029-ABAC-C
The establishment of a carbon market assumes that there is an effective means of transforming price information into technical carbon reduction measures. However, empirical evidence reveals that the links between price information and carbon management strategies are far from obvious. To understand how delegating CO2 responsibility affects CO2 trading behaviour, this article proposes a neo-institutionalist approach to answering the question of why companies became sellers, buyers or a combination of both during phase I of the European Emissions Trading Scheme (EU ETS). Original data from a survey on companies that participated in this scheme were collected and analysed. It was assumed that the trading scheme offered two ways to delegate decisions regarding emissions trading: decoupling from technical knowledge and financialization (i.e. delegating to financial departments) or coupling using technicalization (i.e. delegating to manufacturing departments). The results support the hypothesis that a company that adopts a decoupling strategy is more likely to buy certificates to fulfil their emissions targets. Adopting a coupling strategy indicates that a company is more likely to become a seller, all else equal. Professional identity is the theoretical basis for this relationship. Delegating carbon management to different departments represents either a stronger coupling or a stronger decoupling from core technological processes.