Analysis Of Factors Affecting China's Carbon Financial Trading Prices Based On The VECM Mode

At present,because of the excessive emission of greenhouse gases like CO2,the greenhouse effect it produces is a serious threat to human survival and development,and causes enormous damage to the global economy.To mitigate the greenhouse effect and reduce global CO2 emissions,governments have accepted CO2 emission rights as a commodity under the Kyoto Protocol,thus constituting the trading of CO2 emission rights.Meanwhile,China’s carbon financial system is still at an early stage of development,with a unified national carbon financial market only officially launched in July 2021.There is an urgent need to strengthen the price discovery function of the carbon emissions trading market and to build a unified national carbon market into a trading system that can promote emissions reduction and energy restructuring by enterprises,hence the need to study the pricing of carbon financial products in China.This thesis adopts a combination of theoretical and empirical research to study the factors influencing the price of carbon finance transactions in China.The main body of this thesis begins with an introduction to the theory of carbon credits and a review of the literature by domestic and international scholars on the impact of carbon market trading prices.Then,from four perspectives: energy prices,economic factors,foreign carbon prices and environmental factors,a pricing model of carbon financial products in China is established and its pricing mechanism is studied.Based on the research results of domestic and foreign researchers,this thesis selects nine variables as factors: energy price,CSI 300 index,CSI industrial index,US dollar exchange rate,Euro exchange rate,EUA futures price and air quality index,constructs a vector error correction(VECM)model,and uses impulse response function and variance decomposition methods to study the direction,magnitude and duration of the role of each factor in China’s carbon emission rights market.The results of the empirical study show thatThe results of the empirical study show that: First,there is a weak negative correction mechanism for the price of carbon financial transactions in China.The factors influencing the movement of carbon financial trading prices include a number of aspects such as its own historical trading price,energy factors,economic factors and environmental factors.In particular,it can be seen that the own movement of the price of carbon rights in the previous period dominates the movement of the price in the subsequent period.Secondly,the price of traditional energy sources remains one of the main factors influencing the trading price in the carbon market,and most of the time coal is significantly more influential than oil.Third,environmental factors have a greater impact on the volatility of carbon trading prices.Fourth,in terms of international carbon prices,EUA futures prices also have a greater impact on the price of carbon financial products in China.V.Euro exchange rates have a greater impact on the price of Chinese carbon financial products than US dollar exchange rates.Sixth,domestic economic indicators have a significant impact on the price of carbon financial transactions.And overall the CSI 300 index has a greater degree of influence than the CSI Industrial index.According to the variance decomposition results,their sustained influence is also greater.Second,the price of conventional energy is still an important factor in carbon market trading,and the influence of coal is significantly greater than that of oil,while the price of coal is also the Granger cause of the carbon trading price.Third,environmental factors have a greater influence on the fluctuation of carbon trading price.Fourth,from the impulse response results,the EU carbon futures price has been a negative influence on China’s carbon price,and the EU carbon futures price is the Granger cause of China’s carbon trading price.V.The overall impact of the US dollar exchange rate in China’s carbon trading is not significant.Finally,based on the results of the above empirical analysis,this thesis puts forward feasible suggestions to stabilize the trading price of China’s carbon market,including giving full play to the price discovery function of the carbon market;understanding the mechanism of the role between the fluctuation of exchange rate and the price fluctuation of the carbon market;and establishing a sound regulatory system of the carbon trading market.