A Study On Bidirectional Risk Spillover Effect Between China’s Carbon Trading Market And Sino-US Energy Markets

We cannot rely just on the might of one country to address the issue of environmental deterioration.Scientific and effective solutions should be developed through global collaboration.Governments from various countries should actively provide proposals and work together to find a shared solution and future.When it comes to global resource scarcity and environmental deterioration,China is at the forefront.The government actively gave proposals and contributed its strength,proposing the "dual carbon" aim of reaching carbon neutrality by 2060 and carbon peaking by 2030.To that purpose,local government departments have begun to support the carbon-reduction process in a variety of ways.Among these,a notable measure is the formation of China’s carbon trading market.China has been steadily establishing a carbon trading market based on the experience of other nations and its own realities since 2011.China’s carbon trading market has grown to become the world’s largest carbon trading market after years of hard work.The opening of the carbon trading market has far-reaching implications for China,the global environment,and linked financial markets.However,because China’s carbon trading market is still in its early stages,the market structure isn’t ideal,and market norms aren’t fully clear.As a result,in order to better understand China’s carbon trading market,it is necessary to investigate the risk spillover effect of the carbon trading market and related financial markets,which not only serves as a valuable scientific reference for government departments working to build and improve China’s carbon trading market,but also effectively supplements risk spillover research.First of all,this paper analyzes the previous research and the current situation of the research objects,and elaborates on the risk spillover effect mechanism and related theoretical basis of the research content in this paper.Secondly,this paper selects China’s carbon trading market,China’s energy market,and the US energy market as the research objects,and studies the two-way risk spillovers between China’s carbon trading market and China’s new energy market,and the two-way risk spillovers between China’s carbon trading market and US energy market.Through the optimal ARMA-GARCH fitting The marginal distribution of each market is obtained,and then the optimal Copula function is selected for the calculation of CoVaR in order to obtain a more accurate risk measurement result.Based on the empirical results,this paper draws the following conclusions: 1.There is a two-way risk spillover effect between markets.2.Risk spillover is time-varying,and extreme returns bring greater risks.3.The risks caused by China’s energy market to China’s carbon trading market have an upward trend.4.China’s carbon trading market structure is not perfect,and the market mechanism is not perfect.Finally,combining the actual situation of China and the United States and drawing on the excellent experience,according to the empirical results,it is proposed that: 1.Continue to develop China’s carbon trading market,and promote the improvement of the structure of China’s carbon trading market.2.Strengthen the risk prevention and control capabilities of the carbon trading market,and pay more attention to Risks brought by China’s energy market.3.Vigorously promote the transformation and optimization of the energy market structure.4.Policy recommendations to promote the coordinated development of the energy market and carbon trading market.In order to provide scientific reference for government departments to further improve China’s carbon trading market,and then Promote China’s carbon trading market to make greater contributions to environmental protection.