Abstract
Research has found that in countries with high CO₂ emissions per capita, state-owned firms in major polluting industries play a significant role. Countries like China, India, Russia, Japan, Iran, and Saudi Arabia, where state ownership is prevalent in the energy sector, are among the top emitters. State-owned companies within the EU Emissions Trading System have lower emissions, contradicting the belief that state-owned firms are not sensitive to carbon prices. The legitimacy effect suggests that governments committed to carbon pricing schemes have stronger incentives to ensure state-owned firms reduce emissions. This research highlights the importance of carbon pricing schemes in holding governments accountable for reducing emissions from state-owned firms, which are often significant polluters.
