What Factors Influence the Price of Carbon Emission Trading in China? A Case of Beijing Carbon Market

Abstract

As an efficient measure to deal with the intensification of the greenhouse effect, markets for carbon emission trading have been considered to establish by governments in developed countries. However, A stable price system has not yet developed for China's carbon trading market, which is still in its early stages. Therefore, to stabilize the price of carbon trading, enhance the carbon trading price system, and support the wholesome growth of the carbon trading market in China, it is essential to conduct research on the factors that affect carbon trading price. Based on the trading mechanism and the monthly data of the Beijing carbon trading market from 2014 to 2020, this paper investigates the influence patterns of energy price, industrial development, macroeconomic growth, and air quality on carbon price changes, and unit root test, Johansen cointegration test, and error correction model are used to analyze the patterns. The empirical results show that industrial development, economic growth, energy prices, and air quality have a long-run equilibrium relationship with carbon prices. While industrial development indicators are negatively correlated with the price of carbon, the price of energy, economic growth, and air quality are positively correlated with the price of carbon emission trading. Finally, some relevant development suggestions are proposed according to the empirical results.