Studies On The International Carbon Emissions Futures Market

Global climate change is a problem of the whole society. In order to solve thisproblem, the international society has adopted the United Nations FrameworkConvention on Climate Change and the Kyoto Protocol. In this framework, threemechanisms of cooperation between different countries’ emissions reduction beganto take shape, i.e. CDM, IET and JI. In this way, the environmental rights of carbonemissions have the attributes of goods and can be traded between different countries,enterprises and individuals. Therefore, the international carbon emissions marketemerged as the times require.The international carbon emissions market includes the spot market andderivatives market, which is based on futures. The international carbon emissionsfutures market has a variety of functions. For market participants, as a kind offutures market, carbon emissions futures market has the function of hedging,discovering price, reducing transaction costs, avoiding performance risk. What’smore, it provides a new investment product. For a country, the establishment anddevelopment of carbon emissions futures market can enhance the country’s pricingpower of carbon emissions and the discourse right in the international climatenegotiations. For the whole world, as a part of carbon emissions trading market, it isan indispensable part of the market mechanism to solve the climate andenvironmental problems.USA, the European Union and India are the representatives of the internationalcarbon emissions futures market. Due to their different circumstances, they havedifferences as well as links in the aspects of institutional arrangements and operation.By analyzing and summarizing the market participants, the futures contracts, riskcontrol, market operation and other specific aspects, we can have an overall understanding of the international carbon emissions futures market. Theseinformation can provide a reference for the construction of the carbon emissionsfutures market in China.The carbon emissions futures markets in USA, the European Union and Indiahave different characteristics. Although USA withdrew from the Kyoto Protocol, ithas a regional market. Relying on a strong financial market system, it established itsbranches all over the world. The European Union has been one of the most importantplayers in the global emissions reduction cooperation, and its spots and futuresmarket construction experience is the important reference to other countries. India isa developing country. It carried out the carbon emissions futures products actively, inthis way to prepare for the possible mandatory emissions reduction and domesticmarket construction.Our country is carbon emissions superpower, and participates in internationalcooperation to reduce emissions actively. Seven pilot districts in China have beenengaged in trading primary products of carbon emissions, and they are expected tobe unified in2016. The development of China’s spot market puts forward the urgentrequest for the construction of the corresponding futures market, and we have thebasic conditions of it. An independent carbon emissions futures exchange should beestablished in China. CEAs and CCERs should be selected as the subject matter offutures contracts. In terms of the futures contract design and system construction, theprinciple that to strike a balance between international rules and domestic realityshould be followed.At this critical moment that the domestic environmental problems force us toreduce emissions and the carbon emissions market begins to recover, China shouldimprove the market structure, in order to solid market foundation of emissionsreduction and strive for the right of international carbon emissions pricing.