A Study On Mechanism Design Of Chinese Carbon Emission Rights

Today, global warming has become one of the most important environmental issues in the world, it is getting more and more attention. Carbon dioxide as one of the most important part of greenhouse gas is the fundamental reason of atmospheric pollution. The critical measure of solving global warming is restricting carbon dioxide emissions, as being one of the methods to be market-oriented, emission permits trade of carbon has been proven to be the most effective emission reduction methods. Nowadays, Energy saving, emission reduction and developing low carbon economy has become the world's new economy development direction, in this background, the research on China's emission permits trade of carbon market has great theoretical and practical significance.In this paper, the main object of the research is emission permits trade of carbon, the paper content can be divided into the following sections:In the first part, the paper introduces the research background. Then, the paper defines the basic concepts of emission rights and carbon emission rights, it summarizes the literature review from two aspects——foreign and domestic. It introduces the relevant market efficiency, market power, transaction costs and the initial distribution of the emission rights trade from the foreign aspect. The introduction of domestic literature review mainly concentrates upon the initial allocation of carbon emission rights, the Clean Development Mechanism (CDM) and the market institutions of carbon emission rights trade. After that it introduces the purpose and content of the paper.In the second part, the paper analyzes the theoretical basis of the carbon emission rights from the theory of scarce resources, the externality theory, the Coase Theorem. Then it focuses on the Coase Theorem-based carbon emission rights trade mechanism model.In the third part, the paper analyzes the situation and characteristics of international and domestic carbon emissions trade market, pointing out the problems which existing in the construction of our carbon trade market.In the fourth part, the paper demonstrates the necessity of the establishment of carbon emission trade market in China, this part comes to the conclusion that China has already have the conditions of setting up a national carbon emissions trade market, the EU emissions trading system (EU ETS)and the European Union emissions allowance (EUA) were also introduced. Then Based on EU ETS and EUA, the paper designs the market institutions of carbon emission rights trade and its product China Allowance (CAA).In the fifth part, it firstly gives the reasons why bringing option mechanism to the initial distribution mechanism of carbon emission rights. After that, by constructing a short time EUA future-based option, we use the Black-Scholes model to price the option.In the last part, it summarizes the whole content of the paper systematically and gives some proposals for the construction of our carbon emission rights trade market.