Analysis Of The Cost And Welfare Of Linking China's Carbon Market

The establishment of a carbon emissions trading market(referred to as the carbon trading market)is a major measure to use the market mechanism to control greenhouse gas emissions.It is also an urgent need to deepen the reform of the ecological civilization system,and it is conducive to reducing the abatement costs of the entire society and promoting the economy to green and low carbon.However,the link of the unified carbon trading market will affect the emission reduction costs and welfare levels of the carbon trading entities.Therefore,it is necessary to quantify the impact of the unified carbon trading market on the abatement costs and benefits brought by carbon trading entities.Firstly,according to the relevant provisions of the Interim Measures for the management of carbon emissions trading and the relevant experience of the European Union's carbon trading market,we select the carbon market link mode to build a unified national carbon trading market,and design related elements in the unified carbon trading market.It mainly includes: estimation of total carbon emission reductions,determination of carbon trading market coverage and coverage gas,division of carbon trading entities,allocation of initial carbon emission reductions,and formation of carbon trading prices.According to the Directional Distance Function,the provinces across the country are divided into three trading entities,namely the high-tech efficiency department,the medium-technical efficiency department,and the low-tech efficiency department.On this basis,using panel Feasibility Generalized Least Squares(FGLS)to fit the marginal abatement cost(MAC)curve for each carbon trading market entities;by comparing the marginal abatement cost and the carbon trading price of the transaction entities,determine the supply and demand of carbon trading market,thus deducing the equilibrium price of the carbon trading market;according to the equilibrium price of the market and the marginal abatement cost curve of the transaction entities,the cost and welfare changes that the carbon trading entities can obtain after linking the carbon trading market are calculated.The research shows that:(1)different environmental technology efficiency of carbon trading entities will lead to the difference of marginal emission reduction cost(MAC).(2)The reduction in costs of different trading entities in the process of linking carbon trading markets will be different,with the highest drop in low-tech efficiency departments,followed by high-tech efficiency departments,and the lowest in mediumtech efficiency departments.(3)Establishing a unified carbon trading market through the link of carbon trading markets can effectively reduce the total abatement costs of society,and thus significantly raise the welfare level of the entire society.The important revelation of this article is that the important role of market instruments in solving greenhouse gas emissions should be fully utilized,and the emphasis should be placed on the property rights of carbon emissions,and a unified carbon trading market should be established through links to carbon trading markets.At the same time,attention should be paid to the issue of the rational distribution of the interests of relevant transaction entities in the process of linking the carbon trading market.