Abstract
A pilot regional carbon emission trading scheme (ETS) has been implemented in China for more than two years. An investigation into the impacts of different factors on carbon dioxide (CO2) emission allowance prices provides guidance for price-making in 2017 when the nation-wide ETS of China will be established. This paper adopts a quantile regression approach to estimate the impacts of different factors in Shanghai emission trading scheme (SH-ETS), namely, economic growth, energy prices and temperature. The empirical analysis shows that: (i) the economic growth in Shanghai leads to a drop in the carbon allowance prices; (ii) the oil price has a slightly positive effect on the allowance prices regardless of the ordinary least squares (OLS) or quantile regression method; (iii) a long-run negative relationship exists between the coal price and the Shanghai emission allowances (SHEA) prices, but a positive interaction under different quantiles, especially the 25%–50% quantiles; (iv) temperature has a significantly positive effect at the 20%–30% quantiles and a conspicuous negative impact at the right tail of the allowances prices.
Highlights
The global warming arising from continuous economic progress is a persistent and serious challenge to the world
China has taken various measures to achieve the targets of emission reduction, and it has been revealed that the most efficient solution is to proceed with carbon emission trading [3]
We can establish the superiority of the quantile regression in relation to the ordinary least squares (OLS) regression model when we estimate the impact of the temperature on the allowance prices
Summary
The global warming arising from continuous economic progress is a persistent and serious challenge to the world. China has taken various measures to achieve the targets of emission reduction, and it has been revealed that the most efficient solution is to proceed with carbon emission trading [3]. The Chicago Climate Exchange (CCX) and the European Union Emission Trading Scheme (EU-ETS) are, respectively, representative of voluntary and mandatory emission reductions [4]. The CCX began carbon emissions trading in 2003. The EU-ETS, set up in 2005, is currently the world’s largest carbon emissions trading market [5]. OHnetnhcsea,nitdisnoretpraredsienngt.aTtihveenofittflhue citmupataecdtsinona arlalonwgeanofce25p–r3ic5eysufoarnS/Hto-nETovS.er half a year and continuously dropped to around 10 yuan/ton in 2015. It is representative of the impacts on allowance prices for SH-ETS
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