Firms’ Preferences for Carbon Market Design in the EU

The recent UN SR15 report is a plea for a fast implementation of effective regulatory action on climate change. In most countries this will require the buy-in of businesses. Clearly businesses – especially in liberal democracies, but not only – have varying preferences for regulation that needs to be understood to properly calibrate policy. But neither the public nor bureaucrats and policy makers necessarily have information about these regulatory preferences. While we do know that there is variation in how corporations position themselves towards climate regulation and that sometimes they would be willing to support market-based policy, we don’t know under which conditions businesses buy into a policy, and what reactions they may have to changes to that policy.