The Drivers Of Carbon Prices And Management System In China

After the industrial revolution,the excessive consumption of fossil energy significantly increased the global greenhouse gas emissions,and the climate and ecological environment problems became increasingly prominent.Since the reform and opening-up policy,China's economy has developed rapidly and ranks second in the world nowadays.However,the rapid economic growth is accompanied by great pressure of climate and environment,and Chinese government urgently needs to explore a new development path to cope with the climate change and ecological and environmental problems.Since 2011,China's economy has taken on a phased feature and entered the “new normal” mode with GDP growth facing downward pressure.Therefore,how to balance economic growth and climate and environmental issues has become a major challenge for China at this stage.In this background,Chinese government has carried out the development of energy conservation and emission reduction and green economic development strategy.From 2013,China has launched eight carbon market in Shenzhen,Beijing,Tianjin,Guangdong,Shanghai,Hubei,Chongqing and Fujian.Also,China has printed and distributed The National Carbon Emissions Trading Market Construction Scheme(power generation),which means the national unified system of carbon emissions has been officially opened.At present,the national carbon market is in the stage of infrastructure construction,relevant systems and supporting measures are not perfect,and the unified reporting system,registration system,trading system and settlement system also need to be further tested.Therefore,the comprehensive and unified currency transaction of the carbon market is expected to be officially realized from the end of 2019 to 2020.As the core of market operation,the trading price of carbon emission rights is not onlyinfluenced by multiple driving factors,but also affects the production and operation decisions of enterprises,thus indirectly affects the industrial upgrading and economic transformation.In addition,in the transition from regional carbon market to national unified carbon market,the overall framework design,relevant policy formulation and relevant trading system management are important guarantees for the efficient and stable operation of the market.In this paper,we have the following train of thought,the carbon market price theory analysis——demand side driving factors of carbon trading prices——supply side driving factors of the influence of carbon trading prices——market institutional driving factors of carbon trading prices——China's carbon market system design and the comparison of China and foreign countries — — international experiences and China's challenges.This paper studies the drivers of China's carbon emissions trading prices and management system with the purpose of building China's carbon emissions trading prices driving factor analysis framework and exploring the management system of unified national carbon trading system design.Based on the existing literature researches,this paper discusses the driving factors of China's carbon trading prices from the theoretical level and analyzes the drivers of China's carbon trading prices with the theory of equilibrium value.Then,we analyzes the pricing of China's carbon trading price from three aspects,demand-side drivers,supply-side drivers and market institutional drivers.Then,we studies the impact effect and regional differences of various drivers on China's carbon trading prices using theoretical and empirical methods.Finally,this paper discusses the management system and system construction of the national unified carbon market,analyzes the status of the management system of each pilot market in China,and makes a comparative analysis with the system design of the international carbon markets,so as to put forward the countermeasures and suggestions of the national unified carbon market management system which are suitable for China's national conditions.First,based on the traditional price theory and modern finance pricing theory,this paper analyzes the financial attributes of carbon financial products,and then usesthe equilibrium value theory to investigate the drivers of carbon emission prices from the perspective of demand and supply and discusses the mechanism of each factor on the price of carbon emission.Drivers of carbon trading prices in this paper are divided into demand-side drivers,supply-side drivers and market institution drivers.Demand-side drivers the price by influencing the demand of carbon emission rights,mainly include the energy prices,economic development level,traditional financial market,macro policies,weather factors and emission reduction technology,etc.;The supply-side drivers affect the price by influencing the supply of carbon emission rights,including total quota,quota allocation mode and quota adjustment mechanism.Institutional factors refer to relevant institutional design factors that influence carbon prices,such as trading system,punishment system and offset system.Based on the theoretical framework of carbon trading prices and the drivers of carbon prices,this paper bases on the demand-side drivers,further explains the impact of energy market,exchange rate market and interest rate market on carbon market and analyzes the impact mechanism of various factors on carbon emission prices from a theoretical perspective.In this paper,impulse response function based on multivariate vector autoregressive model is used to analyze the impact of energy price on carbon emission right price.The influence of exchange rate on carbon emission prices is studied by constructing a Markov-Switching model.Considering the asymmetry of the influence of exchange rate on carbon emission prices,a dummy variable is added to the Markov-Switching model aiming to examine the asymmetric effect.Finally,we uses Copula-EGARCH model to analyze the correlation between interest rate volatility and carbon prices.The research shows that the energy market has a general influence on the carbon prices of China,and the influence shows the characteristics of regional differences.The impulse response generated by the impact of different energy prices is significantly different,and the impulse response generated by the impact of the same energy price on different carbon markets is also different;The exchange rate market influences the carbon prices through two channels,energy price and import and export trade and the influences showsignificant regional difference and asymmetry.The influence of interest rate market on carbon price shows significant regional difference in terms of positive and negative correlation coefficient,tail correlation and non-linear correlation.Based on the discussion of demand-side drivers of carbon price,this paper then analyzes the supply-side drivers of carbon prices mechanism.Analyzing the status of quota system from five aspects,which are total emissions coverage,emissions quotas,quotas segmentation,quota allocation and quota adjustment and then analyzing the mechanism of carbon emissions prices,providing research support to stabilize the carbon market prices.The results show that there are significant differences in the quota management systems of various pilot areas.Among them,since the secondary industry accounted for a large proportion,the carbon trading prices level of Guangdong is positively proportional to the number of controlled enterprises,and inversely proportional to the quota of controlled enterprises.In terms of total quota,the average carbon trading prices of Guangdong is inversely proportional to the unit quota of controlled enterprises,indicating that the total supply of the market has a weak influence on the carbon prices of Guangdong,while the unit quota of controlled enterprises has a more significant influence on the prices.Based on the analysis of demand-side drivers and supply-side drivers,this paper further discusses the impact of market institutional factors on carbon prices.Firstly,this paper introduces the status quo of the system design of China's pilot carbon markets.Secondly,the paper analyzes the influence of relevant policies and systems on the carbon market price,and focuses on the quantifiable important system--CCER offset mechanism to explore the mechanism of CCER offset on the carbon trading prices.Finally,a panel fixed effect model is constructed to analyze the impact of carbon market offset mechanism on the trading price of carbon emission rights from an empirical perspective,and to explore the differences in the stages of the impact,and two dummy variables,adjacent to the performance period and non-adjacent to the performance period are introduced,also.The results show thatCCER offset mechanism has a negative effect on carbon prices.At present,various pilot carbon markets use different proportions to limit the offset amount of CCER.Since CCER is a substitute of carbon quota and the price is low,its entry into the carbon market will have some impact on the trading of carbon quota.When the supply of CCER increases,both the supply and demand of the market will decrease,but the change in supply is less than the change in demand,so the carbon trading price decreases.The influence of CCER offset mechanism on the trading price of carbon emission rights is consistent in the two stages of near performance period and non-near performance period,both of which are negative influences.It can be seen that the impact of CCER offset mechanism on carbon trading is sustained and stable in different stages,and there is no significant difference with the approach of the implementation period.Based on the discussion of the influence of various drivers on carbon prices,this paper studies the management system of national unified carbon market from the perspective of foreign carbon trading experiences.First of all,this paper summarizes the famous international carbon markets system design,including European Union Emissions Trading System(EU ETS),Carbon Emissions of California System(CA CAT),Chicago Climate Exchange(CCX),Regional Greenhouse Gas Initiative(RGGI),Australia New South Wales Greenhouse Gas Reduction Scheme(NSW GGAS),Carbon Pricing Mechanism(CPM).Finally,we compare the similarities and differences between domestic and international carbon market system design,draw lessons from foreign mature experiences,put forward China's pilot carbon markets exist problems on legal system,policy,liquidity,quota mechanism and market regulation,also we discusses the challenges in the process of establishing unified national carbon trading system,including laws and regulations,market liquidity,quota management system and market equity,etc.Finally,this paper puts forward countermeasures and suggestions on the national unified carbon market management.Firstly,price discovery function of the carbonmarket should be brought into full play to build a unified national carbon emission right trading system that is conducive to corporate emission reduction and energy structure adjustment.Secondly,it is necessary to grasp the mechanism of action between exchange rate fluctuations and carbon market price fluctuations,and build a unified national carbon emission trading system that can effectively resist and prevent external risks.Thirdly,based on the regional differences of monetary policy influencing the carbon prices,a unified national carbon emission trading system should be established which is efficient,stable and fair.Fourthly,optimizing the carbon quota management mechanism and building a unified national carbon emission trading system with accurate and reasonable allocation of total quota.Fifthly,improving the transparency of information related to the carbon market and building a unified national carbon emission trading system with open details and transparent information.Finally,establishing and improving the regulatory system of carbon trading market and building a unified national carbon emission trading system with overall coordination and balanced differences.