UNDERSTANDING THE EUROPEAN CARBON MARKET AND ITS INFLUENCE ON GREEN INNOVATION IN THE ENERGY SECTOR: AN EXPLORATORY STUDY

This work intends to review the European Carbon Market and examine the influence of the European Emissions Trading System (EU ETS) on green innovation within the European energy sector. The EU's cap-and-trade system, the ETS, has been a crucial instrument in achieving both its short- and long-term climate goals since it was put into place in 2005. This study used an exploratory approach to conduct a comprehensive desk assessment of the existing literature in order to ascertain the benefits and drawbacks of the ETS. The study uses secondary qualitative data to investigate the relationship between the trading system and the development of environmentally friendly practices, with a focus on green innovation, across ten major European energy corporations. According to this research, there is a positive relation between the EU ETS and a rise in low- or carbon-neutral R&D projects as well as green innovation. In keeping with the EU's goal of net-zero emissions by 2050, the research study also enumerates the companies' climate successes, ambitions, and strategies. The research contributes to the body of literature by offering a thorough overview, outlining the benefits and drawbacks of the EU ETS, and examining compliance and innovation projects in the energy industry.