Study On The Shadow Price Of Carbon Emissions In China

Address climate change and reduce the emissions of greenhouse gas is a major challenge that the world is facing today. The United Nations Framework Convention on Climate Change is formulated in New York on May9,1992.The Kyoto Protocol is took effect in2005. The effect of The Kyoto Protocol makes that carbon resources have trading values. Then the carbon trading market is formed and continued expansion rapidly year by year. As the carbon emitters and non emission reduction obligations, China has become a leading supplier of global carbon resource, but always at the bottom of carbon trading value chain. The enterprises in our country provide massive reduction resources for the developed countries while conveying huge economic interests to them. With the in-depth development of carbon trading practice, many scholars has been keen to discover that China as the biggest seller in international carbon trading market has missed the power of carbon pricing. This issue has aroused the attention of many scholars.Aiming at this problem, by reading a lot of literatures, the author found that the current focus of most scholars can be summed up as three aspects, that is: qualitative analysis on the price situation of China’s carbon trading, factors that affect the price of China’s carbon trading, and carbon pricing in the carbon trading market. There is no scholars do research on the shadow price of China’s carbon emissions. At the same time, the Chinese government clearly stated that gradually establish a market for carbon emissions trading in the "Twelfth Five-Year Plan". Because of the previous research on the carbon price mainly focus on the price of carbon trading, there is no scholars to do further study on the shadow price of China’s carbon emissions, combined with the urgency of constructing domestic carbon trading market, which makes the study of the intrinsic value of China’s carbon emissions has a very important significance. Therefore, this paper focuses on the shadow price of China’s carbon emissions. This study will be a necessary supplement to the research field of the carbon price, and has reference significance to China’s carbon trading practices in the future.Through the retrospect of the shadow price and the shadow price of production factors, and based on considering the particularity of the carbon emissions environmental pollution, this paper gives the following definition of the shadow price of China’s carbon emission.The shadow price of carbon emissions in China is that the incremental of real GDP caused by adding the last unit of carbon emissions while the other input factors are unchanged. That is the shadow price of carbon emissions in China is equal to the marginal productivity of carbon emissions in china. Similarly, the shadow price of carbon emissions can also be described as, the amount of reduction of real GDP caused by reducing a unit of carbon emissions while the other input factors are unchanged. That is the opportunity cost of carbon dioxide emissions is the amount of reduction of real GDP. In other words, the marginal abatement cost (opportunity cost) of carbon dioxide emissions is the China’s shadow price of carbon emissions which this article to study. The shadow price is not the market price, but make a valuation that the contribution of the carbon emissions in the production. This price is a measure of strictly economic value of carbon emissions, reflecting the true value and intrinsic of carbon emissions while resources achieved the optimal configuration. In the complete competitive market, the shadow price of China’s carbon emissions equal to its market price.For the successful study of the shadow price of China’s carbon emissions, the author introduced the research background, the purpose and significance of the research, ideas and methods of the study, the possible innovation and deficiency of the research in the first chapter of this paper. In the second chapter, make a literature review of the previous research on the carbon price, and thus proposed that the shadow price of carbon emissions in China as the keystone of this paper. In the third chapter, firstly, defines the object of this research, and then gave a detailed introduction on the marginal productivity theory that related to this study. Marginal productivity theory refers that the intrinsic value of production factor is equal to its marginal productivity. Then analyzes the application of partial equilibrium and marginal productivity theory in the analysis of the shadow price of China’s carbon emissions, and concludes that the shadow price of China’s carbon emissions is equal to the marginal productivity of China’s carbon emissions, it is also equal to the marginal abatement cost of our country.In order to calculate the shadow price of carbon emission in China, the author improved the traditional Cobb Douglas production function in the fourth chapter, and took the carbon element into the production function model, established the trans-log production function model, the formula of the shadow price of carbon emissions in China is obtained by mathematical operation. This paper uses the Ling method to parameter estimation and statistical tests on the trans-log production model. The best Ling value this research finally selected is of0.05.Then the estimated values of the parameters can be obtained. We can have the shadow price by Taking the parameter values into the formula of the shadow price of China’s carbon emissions. This paper calculated the shadow price of China’s carbon emissions from1979to2008.Then use the shadow price of China’s carbon emissions to do a comparative analysis with the average trading price of the Primary CDM, the Secondary CDM and the EU-ETS. We find that the relationship between the shadow price of China’s carbon emissions and the average trading price of the three major markets is practical through the graph comparative analysis. It also proves that the calculation of the shadow price of China’s carbon emissions in this study is reasonable. This study further calculated the price distortions of China’s carbon emissions, through the calculating formula of price distortions, this paper calculates the levels of price distortions of China’s carbon emissions. From2005to2008, the levels of price distortions in China’s carbon emissions are:3.69,2.81,1.77,1.53. This indicated that, there are different distortion levels in the price of China’s carbon emissions. This paper further analyzes the causes of the price distortions in China’s carbon emissions and the economic effect brought by the distortions. Finally puts forward corresponding countermeasures and suggestions for this problem. This study maybe provides some reference for the future research of carbon price and practice of carbon trading.