The Analysis On China's Carbon Trading Market

Global warming attracts extensive attention worldwide, the Kyoto protocol goes into effect in 2005, signatory countries reach an agreement on carbon emissions and form three kinds of market mechanism:the international emissions trading, joint implementation mechanism, the clean development mechanism. Emissions of carbon dioxide and other greenhouse gases become a kind of right, greenhouse gas reduction become invisible commodities, it has economic value, can be traded, this becomes the foundation of the carbon market. China participates in the clean development mechanism. The carbon market develops actively on the basis of this, the European Union and the USA take the lead in enter into this field, and form a mature trading system, the European Union greenhouse gas emission trading mechanism dominants in the global carbon trading market.China's carbon trading market also began to start, it has great development potential, China sells emission amount to the developed countries that have the responsibility to reduce emission in the international carbon trading market, and the certified emission reductions we have got accounts for half of the world, we are the main seller. Now we already have Beijing environment exchange, Shanghai environmental energy exchange, Tianjin emissions exchange and Shenzhen emissions exchange which established in 2010 and so on.But there are also a lot of problem in our carbon market. The first, the relevant system lags behind, the main causes are our country is in the industrial rapid development stage, energy consumption and the increase of carbon emissions is inevitable; the energy consumption and the energy efficiency of various regions are different, there is compartmentalization, it is difficult to take the region as the unit of quotas; energy consumption conflicts with the enterprise development; extensive growth causes the difficulties of establishing a standardized trading system; carbon trading development process mainly depends on administrative power, the market does not works. In addition to this, the speed of CDM project falls behind China's emissions potential, the direction of the CDM development is different from that the state encourages, the number of the projects that are registered successfully is fewer than India and Brazil, the slow development of finance becomes a bottleneck. The global financial crisis causes certain effect to our carbon trading development, enterprise's enthusiasm to reduce emission is hit, the buyer's capital escaping makes our market disorder, relative to the European Union which are perfect in market less competitive. When the Kyoto protocol expires, we may have to undertake commitments to cutting carbon emissions under international pressure, that will directly influence the available of our carbon emissions. Meanwhile India is similar to China, and India is our strong competitor.China's carbon trading market is largely driven by the government, so the relevant policy and management play very important role, this also lay the foundation for the future development. There are domestic examination and approval department, such as National climate change leading group, National development and reform commission, Ministry of science and Technology. After the examination and approval, the CDM project filing materials should be examined and verified, a conclusive report should be issued. Then apply for the registration to the United Nations executive council. Once that is succeed, the project can start to implement the emissions reduction activities. There is a prominent feature in our carbon market, the government work out the unwritten rules of guiding prices for a specific project's CERs, our government and the enterprise which implement the project have the profits that generates in transferring the greenhouse gas reduction in CDM. The price of the CERs that we participate in is significantly lower which is caused by lacking of pricing. It has many negative influences, in the short run, our domestic enterprises participate in carbon trading lost huge economic benefits; in the long run, in the future if we also undertake commitments to cutting carbon emissions, the domestic enterprise will face the high risk in repurchasing carbon emissions.So, view of the development problem of our carbon trading market, this paper puts forward several suggestions:introduce the option pricing mechanism in carbon emissions; use policies to promote national carbon trading system; adopt the baseline and credit system which are based on the industry to avoid intersecting the confusion; enhance the enterprise's conscious to joint in the carbon trading, encourage enterprise to innovate, to increase technology content, to improve energy efficiency, to develop clean energy, to modify the industrial structure and the energy production structure; gradually transit from the administration pushing to market promotion and pay attention to the complementary of the two methods; advance the process of RMB internationalization, actually China's carbon trading market and this are promoting each other; integrate the scattered environment exchanges, create a unified national carbon trading center which sharing information and forms linkage.