The Research Of The Business Mode Of Chinese Carbon Finance Market

In the China’s carbon emissions trading forum held in February 4,2015, the NDRC Climate Division said that China will start the national carbon market in 2016, and initially will include enterprises that have an annual emission of 26000 tons or more, those enterprises mainly in 5+1 industries(electric power, metallurgy, nonferrous metals, building materials, chemical industry and aviation services). This is following the 2014 "national climate change plan(2014-2020 years)" that proposed to continue to deepen the development of carbon emission trading pilots, and the first time made a clear time node of the construction of a national carbon market. With the Chinese carbon market gradually becoming mature, the carbon financial system will developing faster, it has a certain significance to research the carbon financial market business mode.Due to the more and more intensive human activity level since twentieth century, the massive emission of greenhouse gas during producing and living have caused serious global warming phenomenon and frequent climate chaos on earth, and gradually bring more and more challenges to the sustainable development of human civilization. In order to mitigate the greenhouse effect, the limitation of greenhouse gas emission like carbon dioxide has become a necessity. The United Nations Intergovernmental Committee on Climate Change had hard negotiation in Japan and finally made the Kyoto Protocol, which creatively give a series of solutions about controlling the emission of greenhouse gas. In this protocol, people abandoned the past way of entirely rely on voluntary gas emission reduction, instead, set up the emission rights of six greenhouse gas, and to quantify the tradable emission right in the unit of carbon dioxide, so that the greenhouse gas emission rights have the property of tradable commodity, and thus the carbon trading market emerged around the world. With the implementation of carbon trading mode, more and more of the carbon emissions quota have been transferred into options and futures, financial derivatives have become the major trend in the market, and so the concept of Carbon Finance have become more and more influential globally. By the introduction of Carbon Finance system, the liquidity of the carbon trading market will be increased dramatically, and more and more people will be attracted to join the global sustainable development. Since Carbon Finance is still a very new concept in China, the researches on Carbon Finance are mostly about the comparison of scheme between China and foreign countries, and we can’t see much about the researches about the business mode. Business mode is the key problem for China to push the development of Carbon Finance, so it is necessary to have launch a research on it.In this paper, I made analysis of the basic economic principle and transaction mode of carbon finance, and emphatically introduces the most well developed carbon trading system, the European Union Emission Trading Scheme(EU ETS). Through the discussion of the EU ETS, this paper explore the history of the rise of the global carbon trading market, analyze the major problems in the exist market, the basic pattern of western carbon finance system and the future trend of the carbon finance market. Then I analyzed the current problem of the Chinese Carbon Finance market, especially point out the major issues of policy support, trading system design and public participation. And I made the conclusion that the core problem is that the business mode is too simple in China. Finally I make some suggestions about how to solve the problem of business mode, and give some examples about mode innovation.Since China is the number one country in carbon emission globally, and also is not in the Annex I list of the Kyoto Protocol, which makes our country has a relatively low pressure in carbon reduction process, and let China has the opportunity to provide a large amount of carbon emission reduction projects and selling the emission quota. Now China has a more and more important role in the global carbon market, and it has become a very important issue that China must develop its own carbon finance market. In this paper, I made an in-depth comparison between the domestic and foreign carbon trading market, introduced the efforts China has made in the past a few years, analyzed the results in the pilot carbon trading cities in China and introduced the progress of initial construction of Chinese carbon finance market. In China, the carbon quota is still not packed up and transferred into financial products, which means most of the carbon quota are just been sold as original reduction equivalent and the foreign players enjoyed most of the profits. Therefore, in this paper I introduce the comparative analysis of the domestic and foreign carbon trading mode, and give some suggestions of developing Chinese carbon finance market, include what kind of policy support the government should supply and how the public financial institution can join the system and make financial tools possible.