Research On Risk Identification, Assessment And Control In China’s Carbon Market

Global climate change is one of the major challenges in the twenty-first century,which has turned into a huge threaten to human survival and sustainable development.To deal with climate change in a cost-effective way,carbon market emerged as a market-oriented trading mechanism,has been put into practices for energy saving and emission reduction by more and more countries and regions including China.As an emerging policy-based market,carbon market faces more potential risks compared to traditional financial markets.China’s carbon market is still in its infancy,with low maturity and more hidden risks.However,the existing literature lacks research on carbon market risk management,which is insufficient to guide China’s carbon market risk management.In view of this,this thesis conducts research on issues related to carbon market risk management.Based on the existing risk management literature,we propose a carbon market risk management analysis framework.From the three aspects of key risk factor identification,risk assessment and risk control,the risk characteristics of the carbon market are analyzed and portrayed in depth,and key issues in risk control are discussed to provide market regulators with information support and decision-making basis.Firstly,an effective and sustainable management of carbon market requires a systematic control of the associated risks.In this study,we evaluate and summarize the large amount of carbon market risk researches and use the meta-analysis to explore the driving forces of carbon market risk.The perspective provided by the meta-analysis allows us to reconsider the abnormal,mixed results,and gaps in carbon market risk researches.Secondly,we propose an assessment index system with 25 indices in terms of 10 dimensions from the three levels of internal,external and interface risks.Furthermore,we propose an integrated model incorporating rough set and technique for order preference by similarity to ideal solution（TOPSIS）to assess the risk of carbon market.Finally,risk control is the execution stage of risk management,which is the stage of problem solving.Taking risk identification and risk assessment results as input,we adopted a system dynamics method to establish a system dynamics model reflecting the relationship between key risk factors in the carbon market,simulated the dynamic changes of carbon market risk over time under different control scenarios,and discussed the key points in carbon market risk control problem.On the one hand,the findings of this thesis can provide ideas and basis for risk management of Chinese carbon market regulators.On the other hand,it can also provide scientific reference for subsequent carbon market risk research.