The Theoretical Mechanism, Practical Dilemmas, and Innovative Pathways of Carbon Emission Rights Trading on the Financial Performance of "Three-High" Enterprises

Enyi Lai; Shiying Wang; Bofeng Wang

doi:10.62177/apemr.v2i6.960

Authors

Enyi Lai City University of Macau
Shiying Wang Xiamen University of Technology
Bofeng Wang City University of Macau

DOI:

https://doi.org/10.62177/apemr.v2i6.960

Keywords:

Carbon Emission Rights Trading, , Financial Performance

Abstract

Against the backdrop of increasingly severe global climate change, reducing greenhouse gas emissions has become a focal issue faced by the world collectively. The extractive industrial society, while enhancing socio-economic benefits, has also triggered a series of environmental and resource issues. "Three-High" enterprises (high pollution, high energy consumption, high emission) have become the primary entities regulated under the carbon emission rights trading system. Based on the Coase Theorem and the theory of diminishing marginal cost, this paper takes "Three-High" enterprises as the main research object and explores the financial impact of carbon emission rights trading on them from three aspects: the cost transmission mechanism, the revenue impact mechanism, and the market risk transmission mechanism. By examining the construction and implementation of carbon emission trading markets worldwide, the study investigates the main dilemmas in how carbon emission rights trading affects the financial performance of "Three-High" enterprises. The research findings indicate that the current fragmentation of the global carbon trading market mechanism makes it difficult for enterprises to formulate comprehensive financial development plans for carbon costs and carbon assets. Internally, insufficient financial management capabilities within enterprises also constrain the application of carbon emission rights. Furthermore, policy fluctuations and an imperfect external regulatory system reduce the stability of the carbon emission rights trading market, thereby creating uncertainties for corporate finances. Based on these issues, the study proposes innovative pathways for the impact of carbon emission rights trading on the financial performance of "Three-High" enterprises from three perspectives: promoting the standardization and coordinated development of the global carbon emission rights trading market; enhancing enterprises' capabilities in managing carbon costs and carbon asset revenues; and optimizing the policy regulatory system to reduce financial uncertainties. It is hoped that this research can provide theoretical references for "Three-High" enterprises to optimize their financial performance under the carbon emission rights trading mechanism and assist them in achieving a sustainable transformation while addressing the challenges of climate change.

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