Assessing the Impact of Climate Policies on Equity Risk: Cap-and-Trade Regulation, Energy-Saving Technology Subsidies, and Carbon Tariffs

Assessing the Impact of Climate Policies on Equity Risk: Cap-and-Trade Regulation, Energy-Saving Technology Subsidies, and Carbon Tariffs

The paper presents a capped-call option framework for climate policies, highlighting cap-and-trade regulation, energy-saving technology subsidies, and carbon tariffs. It involves a life insurer providing green finance to a carbon-intensive manufacturer, examining their procurement of carbon allowances and export activities under cap-and-trade and carbon tariff systems, respectively.

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