Empirical analysis of company strategies and success factors in EU emissions trading on the basis of the EUTL transaction data set for 2005-13

In this paper, we aim to explore empirically the factors determining firms' trading activities, using the EU-ETS as a case study. In particular, we analyze firms' trading intensity, employment of market intermediaries such as brokers, use of forwards and futures markets, the timing of trading, and -last but not least - to which extent firms trade internally thus potentially foregoing cost savings and revenue gains. Our multivariate econometric analysis employs a unique panel, compiling annual data on trading activity, allocation and verified emissions from the EU transaction log (EUTL) and company characteristics from the ORBIS data base from 2005 to 2014, thus ranging over three trading periods. In particular, we explore the relation of firms' trading activities with firm characteristics such as profits, size, or belonging to particular sectors (e.g. energy versus industry sectors) and whether firms are net sellers or net buyers in a particular year.