Carbon Emission Trading Market Research Articles

Research on Accounting Treatment of China's Carbon Emission Right under Low Carbon Economy

Carbon accounting plays an important role in the balance between economic development and environmental protection. It is an effective tool to push enterprises to reduce emission. Under the guidance of the carbon peaking and carbon neutrality, along with the establishment and development of China's carbon emission trading market, the Ministry of Finance also issued the Interim Provisions on Accounting Treatment of Carbon Emission Trading to guide the standardized accounting treatment of relevant businesses of key emission enterprises in China. In this paper, the existing research on carbon accounting was discussed, and the views of the industry on the recognition and measurement of carbon emission quotas before and after the promulgation of the Provisional Provisions were reviewed. Moreover, the shortcomings of the Provisional Provisions were analyzed, hoping to contribute to the improvement of China's carbon accounting system and the development of the carbon emission trading market.

Carbon price prediction in China based on ensemble empirical mode decomposition and machine learning algorithms.

The carbon emission trading market is crucial for reducing emissions, conserving energy, and enhancing the climate and environment. Studying carbon price forecasting can encourage China's involvement in international carbon financial instruments trading and promote the development of China's pilot carbon markets. This study employs ensemble empirical mode decomposition (EEDM) to convert the initial carbon price, which is a non-stationary signal, into several intrinsic mode functions and residual terms. Subsequently, hybrid machine learning methods are used to estimate the carbon price. For empirical analysis, the three main carbon markets with large trading volumes, Guangdong, Hubei, and Shenzhen, are selected from the eight pilot carbon markets. To achieve short-term carbon price prediction, a hybrid model combining a genetic algorithm (GA) and back propagation (BP) neural network is used. This model effectively addresses the issue of neural networks falling into local optimization. The results indicate that the hybrid algorithm is significantly superior to other algorithms for short-term prediction. Additionally, another hybrid model, combining the least squares support vector machine (LSSVM) and particle swarm optimization (PSO) algorithms, is employed to reduce forecast error while minimizing search parameters, which is not possible with traditional neural network models.

Study on the Pathway of Energy Transition in Inner Mongolia under the "Dual Carbon" Goal

As an important strategic energy base in China, Inner Mongolia's energy exports are dominated by coal and electricity. Under the background of "double carbon" target, the energy transition of Inner Mongolia is of great significance to China’s energy security and carbon emission reduction. Based on the energy policy simulation model (EPS model), this paper explores the path of energy transition in Inner Mongolia by constructing the scenarios of developing renewable energy, developing CCS technology and carbon pricing, and simulating the policy situation based on the reality of Inner Mongolia and the energy transition experience of developed countries and regions. The results show that (1) The energy production and power generation under the development of renewable energy scenario (RE) and carbon pricing scenario (CP) are lower than the "Business as usual" scenario (BAU) for a certain period of time, which affects China's energy security. However, by 2060, power generation and energy production under both scenarios exceed the BAU scenario, and the energy production structure is dominated by renewable energy in both cases. (2) If the Inner Mongolia government focuses on short-term carbon emission reduction, the government should actively promote the establishment of a carbon emission trading market and increase the use of renewable energy through the improvement of the carbon pricing mechanism to promote carbon emission reduction in Inner Mongolia. If the Inner Mongolia government focuses on long-term energy supply stability, it should vigorously develop CCS technology.

Discussion On The Development Of China's Regional Carbon Market Under The Background Of Double Carbon

Accelerating China's carbon trading market is one of the important means to deal with climate change and achieve the dual carbon goal. Due to the huge differences in China's regional economic development and carbon resource endowment, the impact of the establishment of the national unified carbon trading market on regional economic development is unstable and uncertain. For local governments to make full use of this empty window period, this paper combs the recent development of the carbon market, and discusses the development prospect of China's regional carbon market under the background of carbon trading. The results show that: ①in the current development of the national carbon emission trading market, we can not achieve the carbon unification of the market and abandon the local carbon trading market; ②In the process of regional carbon trading, it can promote the low-carbon development of local economy; ③In the process of regional carbon trading, it can increase the share of clean energy and improve the efficiency of regional ecological and environmental protection. Then, some suggestions are put forward for the development of local carbon trading: ①appropriately expand the pilot scale of local carbon trading, go up and down, and realize the double cycle development of carbon market; ②Strengthen the training of professionals and create an innovative and entrepreneurial business environment; ③build a carbon platform with big data technology and improve the Regional Internet plus carbon enterprise database; ④Actively promote the development of PPP model, explore the carbon sink transaction of cooperation between the government and social capital, continuously improve the regional green and low-carbon development, and jointly promote the realization of the "double carbon goal".

Research on the risk spillover effect of carbon emission trading market and various industry markets in China and the European Union

AbstractWidely concerns over the carbon emission problems have been aroused. Prior studies have documented the correlation between the carbon emission market and industries separately. This study compared the tail risks and risk spillover effect of the carbon emission and 11 industries markets in China and the European Union (EU) by using the multivariate multi‐quartile conditional autoregressive at‐risk model. Moreover, to evaluate the risk spillover of each market under extreme risk conditions in time domain and frequency domain, DY spillover index and BK spillover index were constructed via generalized forecast error variance decomposition and generalized causation spectrum, respectively. Findings are as follows: (1) The tail risks and fluctuation of the trend of Chinese industry markets reflects more higher and larger than those in the EU; (2) The EU suffers from smaller external shocks, while China has the opposite result and can recover relatively faster; (3) In China, energy, industrial, information technology, financial, real estate, consumer goods, carbon emissions, and discretionary consumption industries are risk spillover industries, while healthcare, materials, telecommunication services, and utilities industries are risk receiving industries. In contrast, the risk spillover industries in the EU remain consistent with those of the Chinese markets except for the materials, discretionary consumption, consumer goods, information technology and real estate industries. (4) On the short‐term, medium‐term and long‐term scales, the risk spillover of China's carbon emission trading market and various industries is basically consistent with that of the EU. These findings contribute to reducing greenhouse gas emissions and achieving the goal of carbon peak and carbon neutrality.

Study on the Effectiveness of CCER Mechanism in Serving the Carbon Emissions Trading Market

Study on the Effectiveness of CCER Mechanism in Serving the Carbon Emissions Trading Market

Can China's energy quota trading impact the market performance and policy effects of carbon emissions trading?

With the gradual shift from dual control of energy consumption to dual control of carbon emissions, energy quota trading (EQT) and carbon emissions trading (CET) policies will be implemented in parallel in China. EQT policy will significantly affect the market performance and policy effects of CET, which consequently affects the dual control of carbon emissions. Therefore, constructing a system dynamics model coupling the national CET, EQT, and electricity markets, this paper researches the impact of EQT policy and its parameter design on the market performance and policy effects of CET through scenario analysis. The results show that: (1) Implementing EQT policy will reduce CET price and trading volume, negatively affecting CET market performance. This indicates that there is a certain substitution between EQT and CET. (2) EQT policy can enhance the emission reduction and decarbonization effects of CET policy. By curbing thermal power investment and generation and promoting green power, the EQT policy reduces carbon emissions by about 4.87% and optimizes the power supply structure. (3) To scientifically design the EQT policy parameters, lower energy saving targets and energy quota benchmark prices can alleviate the negative impact on CET market performance, but are not conducive to improving CET policy effects.

Impact of carbon emission trading system on green technology innovation of energy enterprises in China

China proposed establishing a carbon emission trading market in its 12th Five-Year Plan to reduce carbon dioxide emissions through market mechanisms, promote the development of science and technology and help China become an environment-friendly country. To examine the impact of carbon emission trading on green technology innovation in Chinese energy enterprises, data from 1993 to 2020 were collected from 494 A-share-listed energy enterprises. Enterprises located in the pilot area of carbon emissions trading were assigned to the treatment group, while those in the non-pilot area were assigned to the control group. The propensity-score-matching method was utilized to match the treatment group with the control group, and the resulting samples were used as the actual sample data. The difference-in-differences method was then employed to assess the net impact of carbon emission trading and investigate its effect on green technology innovation in energy enterprises. This empirical study suggested that carbon emission trading has a positive impact on green technology innovation in energy enterprises, particularly state-owned ones. Larger enterprises are more willing to engage in green technological innovation than small enterprises. Furthermore, when faced with a carbon emission trading system, ‘mature’ companies tend to pay more attention to green technology innovation than younger enterprises do. This study puts forward policy measures for establishing a national-level carbon emission market in China in the future.

Governance effects of pollution reduction and carbon mitigation of carbon emission trading policy in China

China's carbon emission trading policy plays a crucial role in achieving both its “3060” dual carbon objectives and the United Nations Sustainable Development Goal 13 (SDG 13) on climate action. The policy's effectiveness in reducing pollution and mitigating carbon emissions holds significant importance. This paper investigated whether China's carbon emission trading policy affects pollution reduction (PM2.5 and SO2) and carbon mitigation (CO2) in pilot regions, using panel data from 30 provinces and municipalities in China from 2005 to 2019 and employing a multi-period difference-in-differences (DID) model. Furthermore, it analyzed the heterogeneity of carbon market mechanisms and regional variations. Finally, it examined the governance pathways for pollution reduction and carbon mitigation from a holistic perspective. The results indicate that: (1) China's carbon emission trading policy has reduced CO2 emissions by 18% and SO2 emissions by 36% in pilot areas, with an immediate impact on the “carbon mitigation” effect, while the “pollution reduction” effect exhibits a time lag. (2) Higher carbon trading prices lead to stronger “carbon mitigation” effect, and larger carbon market scales are associated with greater “pollution reduction” effects on PM2.5. Governance effects on pollution reduction and carbon mitigation vary among pilot regions: Carbon markets of Beijing, Chongqing, Shanghai, and Tianjin show significant governance effects in both “pollution reduction” and “carbon mitigation”, whereas Guangdong's carbon market exhibits only a “pollution reduction” effect, and Hubei's carbon market demonstrates only a “carbon mitigation” effect. (3) Currently, China's carbon emission trading policy achieves pollution reduction and carbon mitigation through “process management” and “end-of-pipe treatment”. This study could provide empirical insights and policy implications for pollution reduction and carbon mitigation, as well as for the development of China's carbon emission trading market.

Research on the Impact of Carbon Emission Trading Market on Regional Economic Development: A Case Study of East China

This article delves into the impact of carbon emission trading mechanism on regional economy, especially in East China, and focuses on analyzing how this mechanism promotes green transformation and high-quality development of the economy by influencing green technology innovation of enterprises. Research has found that carbon emission trading not only incentivizes companies to reduce greenhouse gas emissions, but also guides capital and technological innovation to flow towards low-carbon areas through market mechanisms, thereby promoting the optimization of industrial structure and sustainable economic development. This article also discusses the impact of different quota allocation methods on green innovation in enterprises, pointing out that the benchmark method can more effectively stimulate the innovation drive of enterprises compared to the historical method. Therefore, according to the research findings, it is necessary to improve the construction of carbon markets, scientifically formulate quota allocation systems, avoid negative impacts on early green innovation enterprises, and provide policy support to reduce innovation costs for enterprises.

Effect Analysis of China's Carbon Emission Trading Pilot Policy on Carbon Emission Control

Many countries have achieved a fundamental consensus to decrease carbon dioxide emissions in order to address environmental and climate issues. China, as the foremost energy consumer and carbon emitter globally, has significantly contributed to the exacerbation of greenhouse gas issues. The most effective method for lowering carbon emissions is through the trade of carbon emissions. In 2011, China began the process of implementing pilot projects for pricing carbon emissions as a means of addressing environmental and climate-related issues. This study use the literature review approach to examine the current state of China's carbon emission trading pilot policies on carbon emission management. It also analyzes the technical and economic impacts of these pilot policies in comparison to non-pilot carbon emission trading policies. The objective of this study is to propose recommendations for the implementation of the national carbon emission trading market in 2021.

Can carbon emission trading improve regional eco-efficiency? Based on the environmental innovation perspective.

This paper uses green innovation and environmental pollution as the mediating variables to construct a mediating effect model to investigate whether China's carbon emission trading policy can improve regional eco-efficiency by reducing regional environmental pollution and stimulating green innovation. This study is based on panel data from 30 provinces and municipalities directly under China's central government and autonomous regions from 2003 to 2019. The eco-efficiency of these provinces is measured using the super-efficiency DEA model and the difference-in-difference method (DID). The results show that (1) China's emission trading policy significantly improves regional ecological efficiency and the per capita GDP. The improvement can effectively improve regional ecological efficiency. (2) The mediating effect of green innovation and environmental pollution is significant. That is, China's carbon emission trading policy further improves regional ecological efficiency by stimulating more green innovation and reducing the synergy brought by environmental pollution. (3) There are differences in the feedback of this impact mechanism between different regions: It shows the characteristics of the western region being more significant than the eastern region. The central region has no significant effect. The research conclusion can provide a policy reference for the subsequent unified promotion of the construction of a carbon emission trading market nationwide and a theoretical basis for helping to achieve the "dual carbon" goal.

Research on the spatial spillover effect of carbon trading market development on regional emission reduction

This paper introduces the current situation of carbon trading market in China and the effect of carbon emission reduction in each region. Theoretically, it expounds the influence mechanism and spatial spillover way of carbon trading market on regional carbon emission. Next, we use the data of 30 provinces in China from 2006 to 2019 to build a continuous spatial difference in difference model (SDM-DID) to empirically study the spatial spillover effect of carbon trading market on regional emission reduction. The results are as follows: First, the implementation of the pilot policy of carbon emission trading has significantly promoted the carbon emission reduction in the pilot areas. From the perspective of impact mechanism, the implementation of carbon trading pilot policy promotes carbon emission reduction in pilot areas by promoting clean transformation of energy consumption structure, improving technology absorption capacity and stimulating development of low-carbon technologies. From the perspective of spatial spillover effect, China’s regional carbon emissions have significant spatial spillover effect, and carbon emissions trading has spatial spillover effect. From the perspective of spatial spillover, the carbon emission trading market promotes the carbon emission reduction in neighboring areas by promoting the clean transformation of energy structure in neighboring areas, improving technology absorption capacity and promoting technological progress.

Modeling the Nexus between European Carbon Emission Trading and Financial Market Returns: Practical Implications for Carbon Risk Reduction and Hedging

The carbon–financial nexus helps firms evaluate susceptibility to carbon risk more effectively. This is the first research article to model the short- and long-run co-integrating association between European financial markets, the CBOE oil price volatility index (OVZ) and the European carbon emission trading system (EU-ETS) by using the daily returns from 1 October 2013 to 1 October 2023. We utilize co-integration test followed by the ARDL framework with an error correction mechanism (ECM). Moreover, we utilize the DCC-GARCH-t copula framework to estimate the hedge ratio and to select an optimal portfolio weight for carbon risk hedging. Overall, the findings suggested that EU-ETS (OVZ) has a consistent positive (negative) short-term influence on all the equity returns of Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Spain and the stock indices of the whole Eurozone. However, in the long term, EU-ETS has a positive (negative) effect on the stock returns of France and the Eurozone (Belgium and Spain). Belgian and Spanish companies could implement long-term carbon reduction policies. Belgian and Spanish firms should focus on the utilization of green energy resources and the internalization of carbon emission-free mechanical processes as this may offer a safeguard against the additional pressure arising from escalating carbon prices. Finally, an optimal portfolio weight selection strategy based upon the DCC-GARCH-t copula approach aims for higher hedging effectiveness (HE) than the hedge ratio strategy when adopting short-term positions in Italian and Danish equity markets to reduce the risk of long-term EU-ETS volatility.

Trading strategies of energy storage participation in day-ahead joint market based on Stackelberg game

The goal of "carbon peak, carbon neutral" and the increasing expansion of new energy have helped to advance the development of energy storage. However, since the operating cost of energy storage is high, carbon emission trading and power market trading have emerged, effectively improving the efficiency. In this paper, a trading strategy and bidding framework of energy storage participation in the day-ahead joint market are studied. A market bidding model has been established in a framework based on the Stackelberg game. Finally, the "Day-Ahead and Intra-Day and Carbon Emission Trading (CET)" market clearing model has been constructed. It has been simplified to solve the equivalent mixed-integer linear programming (MILP) problem with equilibrium constraints through the use of the Karush–Kuhn–Tucker (KKT) optimality criterion and duality principle. The proposed model is validated through improved examples to obtain thermal unit output cuts of up to 32.2% during load trough periods, and up to 16.75% increase in clearing prices during peak load periods. The storage life is extended and the storage output variation is minimized.

A study on the dynamic impact of carbon emission trading on green and high-quality development.

As a pivotal element in market mechanisms, carbon trading is increasingly recognized as crucial for achieving China's Carbon Peaking and Carbon Neutrality Goals. This study introduces a comprehensive dynamic model, integrating carbon trading, emissions, economic growth, and green technology innovation, to offer a holistic understanding of the interplay between these domains. Utilizing principles from nonlinear dynamics and chaos theory, the model is adept at simulating various scenarios and assessing the effectiveness of government policies in stabilizing these complex systems. In-depth analysis provided by this research sheds light on the nuanced impact of carbon trading policies on sustainable development. Key findings highlight (1) Carbon trading's essential role as a catalyst in propelling sustainable and high-quality growth. (2) A strong positive relationship is observed between the sophistication of the carbon trading mechanism and its effectiveness in stimulating green technology innovation and fostering high-quality green development. Notably, carbon trading's influence on green technology innovation markedly enhances the efficacy of carbon emission reduction strategies. (3) Government regulations are instrumental in augmenting carbon prices, thus incentivizing increased corporate participation in emission reduction and enhancing the overall impact of carbon emission reduction. Nevertheless, the study identifies a critical threshold in regulatory intensity, beyond which there is a risk of system destabilization ( ). These findings underscore the imperative for developing an integrated national carbon emission trading market, prioritizing sustainable growth strategies and diligently pursuing China's environmental objectives.

Substantial innovation or strategic innovation: An evolutionary game analysis of companies' green technology innovation strategies under carbon emission trading market

AbstractAlthough both the carbon emission trading market (CETM) and government regulatory actions promote companies' green technology innovation (GTI), little research has considered whether such innovation is substantial. In this paper, we categorize companies' GTI strategies into substantial innovation and strategic innovation. Considering market powers, the heterogeneity of companies, and the mutual influence of governments and companies, we construct a tripartite evolutionary game model that involves large and small companies and the government and conduct a simulation utilizing data on China's CETM. Our findings reveal that carbon trading prices, innovation subsidies, and the government's verification mechanism are the main factors that affect companies' choices regarding substantial innovation. However, the current carbon trading prices in China are relatively low, and companies are still likely to choose strategic innovation. Moreover, we find that when the substantial innovation of large companies exerts a greater impact on the product revenues of small companies, small companies are more inclined to choose substantial innovation. Therefore, in an effort to induce companies to choose substantial innovation, the CETM should play the leading role in this situation, and the government should implement different innovation subsidies and improve the verification mechanism.

The price behavior characteristics of China and Europe carbon emission trading market based on the perspective of time scaling and expected returns.

China has the world's largest carbon market in terms of greenhouse gas emissions, but its system needs to be improved and enhanced. In comparison, the European carbon market stands as the most mature and well-developed carbon market globally. Carbon trading prices, serving as a barometer for the carbon market, are significantly influenced by investor behavior. Therefore, it is necessary to analyze the characteristics of carbon trading prices in both China and Europe, considering the impact of investor trading intervals and psychological expected returns. This study utilizes the Zipf method to characterize the dynamic behavior of carbon trading prices between China and Europe, conducting a comparative analysis. The results show distinctive asymmetry in the behavior of carbon trading prices in both markets. In the Chinese market, when τ < 277, the absolute deviation da(τ, ε) value gradually changes but consistently indicates a bullish trend. However, when τ ≥ 277, the da(τ, ε) value surges rapidly, reflecting a pronounced bullish sentiment among investors toward carbon trading prices in China. In the European market, within the sample period, regardless of variations in τ and ε, the da(τ, ε) value shows a linear upward trend, indicating a significant overall bullishness in prices. This suggests a higher probability of long-term bullishness in carbon trading prices. Investors' investment time scale (τ) and expected returns (ε) both influence the behavior of carbon trading prices in both China and Europe. Generally, a longer τ implies a higher probability of bullishness. As for ε, higher values lead to more extreme judgments on price movements, resulting in greater distortion in carbon trading prices. Short-term investors (τ<1 month) anticipate extreme fluctuations, exhibiting random behavior when ε < 0.15 and converging rapidly to extreme values of 1 or 0 when ε ≥ 0.15. Long-term investors (τ>quarter) are less biased, expressing a bullish outlook on both Chinese and European carbon prices. With increasing ε, the probability of bullishness either increases or decreases rapidly until reaching the saturation point. Once saturated, there is no further distortion in carbon price behavior. Furthermore, the Chinese carbon market displays a positive trend in carbon trading prices and a higher probability of long-term bullishness. For the European market, lower expected returns contribute to considerable carbon trading price fluctuations, exacerbating risk and uncertainty. The results of this study contribute to understanding the diverse trading behaviors in Chinese and European carbon markets and provide guidance for avoiding extreme volatility in carbon trading prices.

Dynamic Analysis on Carbon Metabolism of the Northern Region of China Under the Background of Carbon Emission Trading Policy

The launch of the national carbon emissions trading market in China is a policy to carry out the Beautiful China initiative and to establish a low-carbon economic development system that promotes carbon emission and waste reduction. In order to detect the carbon metabolic processes of the pilot and nonpilot municipalities or provinces in the northern region of China， the theory of urban carbon metabolism and the methods of input-output analysis and ecological network analysis were introduced and used. The results showed that the direct carbon emissions of Beijing and Tianjin had decreased， but their embodied carbon emissions had increased since 2012. The direct and embodied carbon emissions of the pilot sectors in Beijing and Tianjin had the same trend； specifically， the emissions of the sectors of mining and washing of coal， extraction of petroleum and natural gas， and manufacture of non-metallic mineral products decreased significantly， but the sectors of production and supply of electric power and steam with high carbon emission increased. The same trend of the embodied carbon emission intensities of sectors with that of their embodied carbon emissions verified that the embodied added values were not growing with the promotion of the carbon emission trading market. Subsequently， the embodied carbon emission of the pilot sectors in all the municipalities and provinces of the northern region were all contributed mainly by the emissions embodied by a path length less than 6； therefore， it showed that more attention should be paid to the trade among sectors with a path length less than 6 and reducing their carbon emissions. Furthermore， from 2007 to 2012， products or service trading among sectors mostly concentrated on sectors within one municipality or province， and these products or services had the characteristics of low carbon emission. Since 2012， the integration development of the Beijing-Tianjin-Hebei urban agglomeration and the new regional economic patterns established in the northern region both promoted the trading across provinces and across sectors. This research is based on the background of the carbon emission trading policy and aims to build a methodology to identify the key actors and paths in a metabolic system. This could provide a scientific basis for regional policy implementation and regional long-term sustainable development.

Analysis of the Tripartite Evolutionary Game between MRV Institutions, Government, and Enterprises in the Context of the Carbon Trading Market

As the global carbon emission trading market develops, the role of Monitoring, Reporting, and Verification (MRV) institutions is becoming increasingly important. This paper analyzes the tripartite evolutionary game among MRV institutions, local government, and enterprises within the carbon trading market context and explores the impact of various factors on market behavior through sensitivity analysis. We find that changes in carbon prices, market maturity, the rent-seeking cost of enterprises, penalty policies of local government, and the supervisory intensity of MRV institutions significantly influence the strategic choices of the participating entities. Notably, high carbon prices may lead to collusive behaviors between enterprises and local government, while strengthened supervision and a reasonable penalty mechanism can promote fairness and justice in the market.