International Carbon Pricing Mechanism And The Price Of Chinese Carbon Emission Permits

Climate change is receiving the global attention among the world, and is also the biggest challenge to the sustainable development of humanity. But actually, behind the problem, it is a problem of national development right. It is a political problem, as well as an economic problem.The "Kyoto Protocol" prescribes the responsibility of the developed countries and sets up three kinds of carbon trading mechanisms:IET, JI and CDM, which designed to make the developed countries complete the carbon reduction targets with minimal costs, helping developing countries to achieve sustainable development. The former is carried out among the developed countries, and The others are executed in the form of projects. JI is traded from developed country to developed country. For China, the only trade form is CDM, Which develops the project satisfied the "extra" principle and sales the emission reduction permits to Annex1countries. Under this mechanism, China currently has carried out a total of3851CDM projects (at the end of March2012). These items can produce an annual641Mtons of emissions permits. China achieved a small amount of money through the exchange of these massive carbon emission rights. But actually, the practical value of these rights is much more than the received money.Through analyzing the international carbon emission right pricing theory, this article explores the internal impact factors and the external impact factors of carbon price. It calculates the peak time of Chinese Environmental Kuznets curve through reviewing the relation between per capita income and per capita carbon emission. It also calculates the peak time through scenario analysis. This article analyzes the contributions of the impacting factors of the current China's carbon emission. Finally, this article analyzes the reasons of price gap between CERs and EUAs. It points out that Chinese CDM projects exist the risk of "low-hanging fruits have been first removed" when the international carbon emission responsibility will be checked. It puts forward some policy advices. Specifically, this article includes the following contents:Firstly, using MAC theory, the paper analyzes that international carbon trading can reduce global carbon abatement cost. It obtains a country carbon emissions analytical solution through the use of STIRPAT model, block growth model and Black-scholes option pricing formula. Using I seeking partial derivative to the formula, We can conclude that C is I's increasing function when other factors remain unchanged. This means that I and C have the same trend. Using (GDP volatility) seeking partial derivative to the formula, when GDP volatility increases, when the point that carbon emissions I exceeds a prescribed threshold, the potential spending will increase.Secondly, this thesis calculates the quantity of embodied carbon of Chinese in2007using IO model and figures out that the scale is2176.02Mtons. The quantity of Carbon balance is35.82%of Chinese total carbon consumption emissions, that is to say, about1/3amount ascribes to abroad. And it analyzes the embodied carbon's effect to the supply demand relation and price of international carbon permits.Thirdly, it analyzes the external factors citing the literature research results, including the correlation between carbon price and energy price, the heterogeneity influence of the environment to carbon price, the influence of carbon emission permits'storability on carbon price, price floors'influence on carbon price.Fourth, this thesis comes out that the Chinese EKC peak time is around the year of2025, and works out that China EKC curve inflection point will appear on the time that the per capita changeless2005price of43590yuan. It also predicts the peaks and inflection points of carbon emission in China using scenario analysis. It provides reference to the problem when China joined the absolute reduction team of carbon emission. Fifth, it describes the reasons which led to the gap between the price of Chinese CDM'CERS and the price of EUAS.Sixth, this thesis analyzes the risk of "low-hanging fruits have been first removed" using NPV method, and offers the most likely responsibility sharing scheme.Finally, it concludes that China should fully understand the various risks in current carbon trading process. China should adjust CERs market supplyment through establishing "carbon emissions reserve pool" or achieving the "carbon American option ", correcting the current distortion price. It also suggests that China should adjust the import and export scale, adjust the industrial structure, pay attention to RE&EE financial construction, strengthen energy-saving environmental protection publicity, pay attention to the use of international negotiation, do our best on making domestic carbon trading market grow faster and maturely.