Study Of Chinese Carbon Finacial Market

Global warming has become a worldwide problem with the development of human society. Having realized the urgency and importance of this issue, countries around the world have combined to look for ways of protecting environment and building a sustainable economic community, which finally brings forth the strategy of low carbon economy, featured by low energy consumption, low pollutant, and low emission. After the Copenhagen Climate Conference, many innovative terms, such as carbon market, carbon trading, and carbon finance start to emerge on mainstream media. As more and more organizations and countries are getting involved in carbon trading, carbon finance is now playing an increasingly important role in accelerating the low carbon economy. China, the largest developing country, now is emitting one third of the total amount of the Greenhouse Gas on the Earth, ranked second in world countries, and is predicted to produce the same amount as the USA by the end of2020. Although having not committed in cutting carbon emission, China has always been actively engaged in the Clean Development Mechanism (CDM), and now it is the county that has received most Certified Emission Reductions (CERs). Therefore, carbon trading and its byproducts have an extremely promising market in China. However, carbon finance market in China is still not fully developed, and its business scope are confined to Green Credit, CDM project financing, and other activities with low added value. Suffering from the lame carbon trading system and lack of specialists in related field, Chinese carbon finance market is consequently hold back and can seldom provide high value-added services.This paper is arranged in the following logic order.Chapter one explains the background of the topic and why the topic is meaningful. Based on previous research in this field, we outline the plan and significance of our research.Chapter two mainly illustrates concepts related to carbon finance. Starting with low carbon economy, we bring in the notion of carbon finance and clarify the relationship between them. When it comes to carbon finance associated theories, we list and introduce several most popular ones concerning Environmental Finance and Corporate Social Responsibility. Finally, we give an overview of the structure of well-developed carbon market, and analytically derive the potential trend in China.Chapter three is to compare the current status of carbon market of China with other countries. For international carbon market, we discuss the formation of carbon trading mechanism, the establishment of carbon fund, and the market of carbon reduction options and futures. When dealing with domestic situation, we examine the launch of carbon emission rights trading exchange and the growth of carbon fund as well as the carbon financial services. Through the comparison, it is not hard to identify that Chinese carbon market still has a long way to go although it has been fast growing in the past few years.Chapter four covers the necessity and feasibility of developing carbon market in China. A healthy carbon market could not only reduce the cost of carbon trading, but also encourage product innovation and cultivate carbon currency, which will ultimately enhance China’s influence on international carbon finance. On the other hand, the exclusive advantage of supportive policy, abundant carbon reduction resources, and exceptionally promising market prospect combine strikingly to make developing Chinese carbon market approachable.Following previous analysis, Chapter five puts forward some strategy recommendations on building the support system for Chinese carbon market. Modeling on mature carbon market around the world, China first of all needs to establish an appropriate development plan and a complete trading mechanism including integrated trading platforms as well as creative trading tools. After this, to fulfill a well-functioning legal framework, to impose Green Finance rules, and to spread the notion of low carbon will be of the first primacy. The third suggestion is to encourage and protect the carbon service agencies, regulatory agencies, and credit rating agencies. The fourth one is to incorporate the thriving carbon financial services into the traditional banking services, including constructing related departments, refreshing related products and services, and building risk manage system. Finally, to strengthen international relations and propel the gradual globalization of Chinese currency are on the must-do list of China to, bit by bit, obtain the power of carbon pricing.With the increase of economy and the number of supportive policies, China should put more effort in studying carbon market, building up national carbon trading system, and getting involved into the international market. As a result, these measures will significantly stimulate sustainable growth of China’s economy.