Abstract

Carbon emissions trading had been widely adopted as a market based instrument for climate mitigation, yet debates persisted regarding its effectiveness in delivering net zero transitions. This study critically examined theoretical foundations and empirical performance of emissions trading systems across major jurisdictions between 2005 and 2022. Drawing upon Environmental Economics and Ecological Modernisation Theory, the analysis integrated econometric panel regression with comparative policy evaluation. Results indicated that participation in emissions trading systems was associated with an average 7.2 percent reduction in carbon emissions relative to non participating jurisdictions, controlling for economic growth and energy consumption. The findings suggested that trading systems contributed to measurable decarbonisation, though effectiveness depended on stringent cap setting and price stability mechanisms. While evidence pointed to modest innovation stimulation, structural transformation required complementary policies. Therefore, carbon emissions trading represented a significant yet partial instrument within broader climate governance frameworks aimed at achieving net zero commitments.