Research On Enterprise Investment And Management Under Carbon Emission Control In China

Global warming and the shortage of energy resources have caused that the rapidadvance of China’s industrialization and urbanization is facing an increasinglystrengthened "bottleneck" of resources and environment. In November of2009, theChinese government officially proposed the objectives of carbon intensity control,which means the internal mechanism of sustainable development of economic andsociety in China will present a new changes under carbon emission constraints.According to the literature we can see that it has been more focused on thequantitative relationship and influencing mechanism between carbon emissions andeconomic growth from the view of macro and medium level, while studying thecorporate investment behavior under carbon emission restrictions from themicro-level did not get sufficient attention. In fact, as the main part of energyconsumption and carbon emission, enterprises’ low carbon behavior is not onlyrelated to the realization of the goal of carbon emission control, but also morerelevant to the quality and efficiency of economic growth in China. And only bydeeply exploring the firm’s micro-economic mechanism under carbon emissionconstraints will it be possible to find effective solutions to carbon reduction. Becauseof this, this article attempts to make comprehensive use of the theory of corporatefinance and the method of dynamic optimal control to systematacially study theinvestment decision-making behavior of a firm under carbon emissions constraints,and put forward some management measures which can promote the firm’s Investmentoptimization under carbon emissions control on the basis of quantitative analysis andexperiences reference.The thesis consists of seven chapters. The first chapter expounds the backgroundand significance of studying the selected topic, defines the relevant concepts andresearch objects, summarizes research design，research contents and research methods,and points out the main innovations of this paper. Chapter II reviews and clears theresearch literature related to the topic (including research about the relationshipbetween carbon emissions and economic growth, policy tools of carbon emissionreduction, firm’s behavior motivation and investment decision-making). Bysystematacially summarizing the results of different research perspectives, we makeclear the theoretical analysis framework for deeply studying the carbon emission control and firm’s investment decision-making, which is also seen as a theoreticalbasis for this article. The third chapter firstly proposes and demonstrates that carbonintensity control is the realistic choice of sustainable development of China, theninspects the changing trend and distribution characteristics of carbon intensity indifferent regions and different industries over the past decades, and also discusses thecauses of uneven status.Chapters IV and V is the focus of the thesis. In the fourth chapter, the authorfirstly, based on a deterministic environment, uses optimal control theory to analyzethe enterprise investment decisions under different means of carbon emissions control.The results show that under various means of control, only its scale is beyond acertain size does the enterprise need spending in carbon emission reduction, and theabatement expenditure is a concave function of enterprise scale. In addition, thecommand-control of carbon emissions mainly reduces the steady-state investmentscale of big enterprises (no influence on small firms), and carbon tax can have directinfluence on enterprises of all types including small firms, while carbon emissionstrading can make all kinds of enterprises get benefit from it (big firms will benefitmore). The fifth chapter further considers the uncertain conditions. It combines thetheory of corporate finance and the method of stochastic optimal control to discuss theeffect that carbon emissions control acts on enterprise behavior of investment andpricing under uncertainty environment. The derived optimal strategies of investmentand abatement expenditure once again confirm the conclusions of the fourth chapter,and also it shows that when considering the random changes in enterprise value whichis caused by investment, each means of carbon emissions control may help to promotethe enterprise to maintain a reasonable scale, and carbon emissions control reducesthe value of the enterprise, which is especially significant when the firm’s scale isvery large.The sixth chapter, based on the game theory of incomplete information, exploresthe effective operation mode of carbon emissions trading which is a typical means inthe reality, and systematically surveys the experience of EU, American and Australianin controlling the firm’s carbon emission. The seventh chapter, based on thecomparison and reference, constructs the management mode of carbon emissioncontrol in China, and puts forward some policy recommendations to promote the firmsto control its carbon emissions. The last content is about the conclusion and prospect,which summarizing the main conclusions of the study, and proposing the researchdirection in the future. The main innovation of this thesis includes the following aspects. Firstly, itconstructs an analysis framework about carbon intensity control and enterpriseinvestment decision. By means of improving and developing the classical model, theauthor makes a dynamic optimal analysis for firm’s investment behavior underdifferent means of carbon emissions control. Secondly, the article establishes aninvesting and pricing model for the firm which is under an uncertain environment andis restricted by carbon emissions. By using the theory of corporate finance and themethod of stochastic optimal control, the paper obtains the firm’s optimal strategies ofinvestment and abatement expenditure. Besides, it deduces the effectiveimplementation mode of carbon emissions trading by using game theory, and aftersystematically summarying the experiences of foreign countries, it comes up with themanagement mode in China to control the firm’s carbon emissions.