Research On The Carbon Trading Price Mechanism In China

Global warming has becoming the most serious environmental problems, a threat to human survival and development, the "Kyoto Protocol" creatively introduced three flexible mechanisms: Assigned Amount Units、 Joint Implementation、 Clean Development Mechanism, providing a basis for carbon emissions trading in the derivative markets. CDM is the only mechanism that is designed for carbon emissions trading between developed and developing countries. Through the mechanism, developed countries invest energy conservation projects or transfer technology to developing countries in exchange for their required carbon emission reduction credits. At present, China, in amount, is the biggest supply-side of the current international carbon emission rights market in CERs. However, without the right of pricing the carbon trading, we have to follow the rules of the game, because the market and standards are both aboard. As a result, we are now at the lower end of the carbon value chain in the CDM transaction process, and passively accept the lower carbon price set by the foreign carbon trading institutions. Therefore, the research on the carbon trading price will help China improve the carbon trading markets, gain more emissions trading revenues, which is also of great significance to promote sustainable economic development.In fact, the products of the carbon emissions provide a basic framework of carbon financial derivatives, and, based on carbon emission rights, there exists various financial derivatives such as carbon forwards, futures, options, swaps. China also plans to set up its own carbon derivatives market. The price-discovery functions of traditional commodity futures markets, is this feature also significant for the emerging carbon trading market? This paper, selecting the international carbon trading spot price data in the last three years, by the empirical analysis of the VAR model to estimate the relationship between the two market prices, proves that futures also has price discovery functions for spot markets in the emerging carbon trading market, for our country, which provides China an important way to enhance pricing power in the carbon trading market. From the inherent meaning of carbon trading and the development of international and domestic carbon trading markets, this paper analyzes the plight of China’s carbon trading pricing mechanisms, and, through the empirical analysis of the relationship between the spot price and the futures price in the current international carbon trading market, proposes that China’s carbon trading futures markets should be established to improve the carbon emissions pricing mechanisms.