The impact of the EU ETS on economic and environmental performance of European firms

In this thesis, I investigate the causal impact of the European Union Emission Trading System, a cap-and-trade scheme introduced to mitigate greenhouse gas emissions. To this end, I build two novel datasets by matching information on treated firms from the European Union transaction log database with economic data from the Orbis database and environmental data from the LSEG Workspace database. To estimate the causal effect of the policy, I adopt a matching strategy combined with a difference-in-differences regression. Further, I investigate heterogeneity of the effect across regional areas and economic sectors, and explore the potential mechanisms triggered by the policy. Results suggest that, while the policy has not had a significant impact on firms’ environmental performance, it has positively influenced revenues.