Climate actions in cooperation : An analysis of the effectiveness of EU ETS and its interaction with national carbon taxes

This study analyzes the interaction between the European Union Emissions Trading System (EU ETS) and national carbon taxes. The primary aims to evaluate whether these mechanisms complement or compete in reducing carbon dioxide emissions. The study is quantitative and applies a panel data analysis covering 37 countries over the period between 2005 and 2021. To address the research questions, secondary data were collected from reliable sources and structured to panel data formal and analyzed using RStudio. Various regression models were created to examine the impact independent variables had on carbon emissions. The findings shows that participation in the EU ETS is not statistically associated with higher CO2 emissions, likely with the variable being binary. National carbon taxes are more effective than EU TS in its current form and no strong evidence was found in synergy or overlap.