The Research Of Carbon Emission Rights Pricing

The climate problem has been widespread concerned by the people along with theeconomic development. In recent years the level of greenhouse gases in the atmosphere isincreasing rapidly, in the face of the consequent climate disaster like global warming, sealevel rise, regional droughts and floods, humans have begun to explore solutions to thiscontradiction between economic and atmospheric environment. Three trading mechanisms inthe Kyoto Protocol linked to the carbon dioxide emissions with the market trading first. Theestablishment of the EUETS makes carbon emissions trading market gradually formed, itprovides the economic means to achieve emission reductions at the lowest cost. Carbonemission rights as a new trading products is increasingly beening known.In the era of low-carbon economy, the development of carbon trading market is a globaltrend. At present, China mainly participate in the world carbon trading markt with CDMprojects, and provides it a large number of carbon emission reductions each year. But becauseof the carbon trading market system is not perfect, we lack of pricing power, that makes ourenterprises do not get the corresponding income. Therefore, discussing the carbon emissionstrading and pricing issues is of great practical significance to the development of carbontrading market in China. This paper introduces the theory of carbon emissions trading and thefamous B-S option pricing model, and discussed the feasibility of pricing carbon emissionsfrom four aspects. The European and American developed country in the leader position ofthe global carbon market, and its practical experience in developing of carbon emissionstrading market has a reference significance to our country. In the third part of the articledescribes the formation and classification of carbon emission rights trading market, andelaborate on the status of the development of the two carbon trading market in the EuropeanUnion and the United States. Combined with the realities of China, analyzes the internalpower and constraints for developing our carbon emission rights trading market. Then makesa atheoretical analysis for Initial allocation of carbon emissions and the formation of carbonemission right price on the secondary market. The empirical part gives option pricing of CERsunder the CDM projects. Combined with BlueNext published carbon trading price data(selected277valid date during the April1,2010to April29,2011), analysised the carbonemission rights pricing by B-S option pricing model and GARCH models, then designed aCERs option and pricing. Finally, gives a summary of the conclusions of this paper, and putforward some suggestions on the development of China’s carbon trading market.