Study On The Risk Prevention Of Carbon Finance In China

In order to alleviate the phenomenon of greenhouse effect intensifying, to achieve the coordination of economic development and environmental protection, most countries are committed to developing Carbon finance and circular economy and other, While with various countries of international pay attention to Carbon finance, Carbon finance has been rapidly developed, but it also brings the risk to Carbon finance market. Since Carbon finance is more complex than the traditional finance, the Carbon finance risk is also more difficult to control.China is a high carbon-emitting country, so there is a thriving carbon finance markets, China’s financial institutions actively participate in Carbon finance activities, at the same time, also pay attention to the challenges and risks brought about by the financial innovation. If the Carbon financial risks are not effectively prevented, it will bring immeasurable loss to the entire financial system or even the national economy.Carbon finance risk is the losses that transaction subject and social may suffer in Carbon financial activities, the Carbon fiance risk categories mainly including project risk, policy risk, economic risk, market risk, operational risk and credit risk. The process to prevent these Carbon finance risk can be summarized as three aspects, they are risk identification, risk assessment and risk control, that’s to say, identify risk before it happens by virtue of experience or perception, use the quantitative or qualitative analysis method to evaluate the risk when it happens. Then on the base of identify and evaluate risk effectively, risk managers make use of variety ways to reduce or eliminate the loss that brings by risk.Carbon finance market in China is still at the primary stage, so our country’s Carbon financial market system and risk management system is not perfect. Therefore, it is necessary to learn Carbon finance risk management experience from the EU and other developed countries, to help our country develop Carbon finance smoothly. The EU countries mainly use common registration system, carbon identification system, spot transaction over-the-counter market and price flexibility mechanism to control Carbon finance risk. On the base of these experiences, We can design the risk management specifically for China’s Carbon finance market. We can prevent Carbon finance risk from the perspective of financial institutions, government and national. Financial institutions such as bank should establish appropriate internal control and risk prevention mechanisms actively. Government should make efforts to improve the policy system, build carbon trading platform, encourage financial institutions to participate in carbon finance actively, regulate carbon trading etc.Our country should take the Carbon finance as a part of the sustainable development strategy, promote the process of RMB internationalization, improve the legal construction of Carbon finance, strengthen international exchanges etc, so as to provide protection to prevent Carbon finance risks effectively.The research on our domestic Carbon finance risk prevention has a significant meaning, it can help us to manage risk effectively, regulate the Carbon finance market. Although due to limitations of data resources, we can’t give a lot of empirical analysis, yet we can summarized the measurement methods of each risk, it not only provides the basis for the Carbon financial risk research in the future, but also provides a reference for us to develope Carbon finance business and prevent Carbon financial risk.