| The issue of global warming caused by carbon emission has become an urgent problem for sustainable development of human beings.155countries signed United Nations Framework Convention on Climate Change (UNFCCC) on United Nations Environment and Development Conference,1992hosted by Intergovernmental Panel on Climate Change (IPCC). The cop3of UNFCCC was held on Kyoto, Japan on December,1997and passed The Kyoto Protocol which was to constraint greenhouse gases of developed countries and global warming in order to fulfill the UNFCCC. The Kyoto Protocol definites market mechanism as a new way to solve the issue of greenhouse gases and openes the door for global carbon emission trading. European Union Emission Trading Scheme (EU ETS), the typical case of mandatory emission, and Chicago Climate Exchange (CCX), the typical case of voluntary emission, were set up on2005and2003respectively to explore the way on how to carry out carbon emission trading. China announced the target of controlling greenhouse gases formally, which was to cut down40%to45%of CO2per unit of GDP with comparison on2005until2020on November,2009, as one of early contracting parties of UNFCCC and a committed supporter of The Kyoto Protocol. The12th national five-year plan outline, released in2011, declaimed establishment of carbon emission market.The paper learns from international experiences and practices and exerts related research to design Chinese carbon emission market. First, it summarizes setting basis and condition on international carbon emission market. Second, exert research on EU ETS and CCX as representatives of mandatory emission and voluntary emission model about suitable condition, trading parties, quota distribution, trading way, time schedule and coordination and surveillance. Third, take use of GARCH, EGARCH, GARCH cluster models to study carbon trading price mechanism and summarize and compare characteristics of them. Then make use of multiple linear regression and variance equitation to test price influence factors under tow models and explain the differences of price mechanism between them. Finally, design Chinese carbon emission market on the basis of conclusions of international carbon trading market about setting basis and condition, trading model, price mechanism and price influence factor.UNFCCC clarifies final goal and basic principles for climate negotiation and starts the road of international climate change negotiation and cooperation on carbon emission reduction. Several law documents were signed, such as The Kyoto Protocol and Bali Road Map and carbon trading system had formed under the guidance of UNFCCC. However, there were divergent standpoints for all countries in the negotiation of controlling carbon emission, which included three aspects, contradiction among developed countries and developing countries, contradiction among developed countries and contradiction among developing countries. This contradiction leads to diversities about goals, quota distribution, supporting way of money and technology and forms numerical models.The paper gets following conclusions under the background above regarding Chinese carbon emission market design.First, two typical case of trading have formed on international market, the mandatory emission represented by EU ETS and voluntary emission represented by CCX. EU ETS is a typical case of mandatory emission. It goes with perfect law and policies system and coordination and surveillance system under the principle of cap and trade. It separates into some stages, broadens market scope gradually, covers from major industries to all step by step and distributes quota with combination of free way and auction, which have characteristics of stage regulation, decentralization of comprehensive management, comprehensive trading ways and market-oriented regulation. CCX is a typical case of voluntary emission. It absorbs members widely under voluntary principle and sign legally-restricted contract to cut emission compulsively. CCX has several phases and sets different baseline and goal for each phase and is in charge of products R&D, platform construction and market surveillance with characteristics of free will and self-discipline, carbon trading under a cap control baseline, transparent market price and convenient trading and independent and fair check. Common points are clear law system, informationizing and convenient platform and abundant experiences with long operation. Divergences are about market types, trader, quota distribution and trading products.Second, EU ETS and CCX have formed different carbon emission trading price mechanism. In the EU ETS, market dissymmetrical effect is very obvious and EGARCH(1,1)-t is both suitable to price estimation and forecast for two phases, but price mechanism is different. Volatility in phase Ⅰ is obviously larger than phase Ⅱ. In the CCX, contract price reacts distinctly on positive and negative news in phase Ⅰ, which means it fits EGARCH(1,1)-t; Contract price reacts congruously in phase Ⅱ, so it is suitable to GARCH(1,1)-GED. They are different in price mechanism. Meanwhile, volatility of price and its earnings in phase Ⅰ is much larger than phase Ⅱ. Their common points include that there are large in phase Ⅰ which are larger than their phase Ⅱ and EGARCH(1,1)-t is fitful to both models in price estimation and forecast of phase Ⅰ, which means dissymmetrical effect is obvious. The different points list as following. First, diverse price mechanism. EGARCH(1,1)-t is suitable to both phases of mandatory emission but only to phase one of voluntary emission, which discovers that dissymmetrical effect in mandatory market is larger than voluntary market. Second, there are great differences of them in volatility, ranging from mandatory phase Ⅰ, voluntary phase Ⅰ, voluntary phase Ⅱ to mandatory phase Ⅱ. In summary, price volatility of voluntary market is larger than mandatory market.Third, EU ETS and CCX have different price influence factors. In the EU ETS, quota supply affected by policy and institution is the most important factor, but it has less and less effect on price with trading policy and system consummation. Crude oil, natural gas and coal also affect EUA price. Coal price is negative in phase Ⅰ, but not obvious in phase Ⅱ. Crude oil and natural gas price are positive, especially in sub-phase one of phase Ⅰ. Coal price has greater effect than crude oil and natural gas price. Wind, temperature and precipitation do not affect obviously. In the CCX, influence factors in phase Ⅰ is quota supply affected by policy and system and its effect is strengthened with time. Crude oil, natural gas, coal price, wind, temperature, and precipitation are not obvious. In phase Ⅱ, energy price is the greatest influence factor and wind, temperature and precipitation are all obvious. Quota supply affected by policy and system is always an influence factor of carbon emission trading. There are three aspects about them. First, quota supply has different effect on them. Quota supply is always the most essential factor in the EU ETS no matter phase Ⅰ or Ⅱ. In the CCX quota supply is the only obvious factor and its influence becomes greater and greater; its effect is smaller than energy price in phase Ⅱ. Second, differences in energy price. In the EU ETS, energy price has less effect and the greatest influence factor is coal price. However, in the CCX energy price is the most important factor and natural gas price is the greatest. Third, differences in weather factors. In the EU ETS weather factors are not obvious, but they are all obvious in phase Ⅱ of the CCX.Fourth, design Chinese carbon emission market based on conclusions from theoretical and empirical research on the EU ETS and CCX. There are four aspects about it. First, market basis and condition. China must get consensus on carbon trading and a principle of cap and trade. Meanwhile, we may suffer diverse benefits including benefits among developed and developing area, benefits among developed areas and benefits among developing areas. They cause conflict on goal setting, quota distribution, money and technology. Second, trading model design. It is a long way to set carbon emission in China. China not only does not get consensus on carbon trading but also is lack of perfect law and coordination system at present, so it starts to set voluntary market rather than mandatory market. After long time trading, it changes to mandatory market gradually. Model design is divided into two phases, voluntary and mandatory phase. Third, price mechanism. There are four steps. The first step is phase I of voluntary market. There are obvious dissymmetrical effect and large price volatility. The second step is phase II of voluntary market. There are no dissymmetrical effect and smaller volatility than the first step. The third step is phase I of mandatory market. Dissymmetrical effect is obvious and price volatility is the greatest. The fourth step is phase II of mandatory market, also final state of carbon emission market. Dissymmetrical effect is very obvious and volatility becomes small, the smallest phase. Fourth, price influence factors. Chinese carbon emission market will be affected by quota supply, economic growth, energy price, weather, cutting costs and so on. In the voluntary model, quota supply affected by policy and system and energy price are important factors. Wind, temperature and precipitation also has relatively smaller effect on it. In the mandatory model quota supply affected by system is the most important model in both phases and energy price will also affect quota price. After analysis on these factors quota supply affected by policy and system is a subjective factor and China can make use of it forming mature price. In addition, we can regulate energy price, too. Operations of China carbon emission platform must exert on several phases. The first phase, from2012to2015, includes CDM, energy efficiency indicators and other environment rights rules formation and training. The second phase, from2015to2020, includes futures, options and voluntary operation. The third phase, later than2020, includes mandatory operation based on quota. |
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