Correlation Between Fossil Energy Futures Prices And Carbon Emissions Trading Prices

In 2020,Party and State leader Xi Jinping proposed for the first time at the United Nations General Assembly the goal of "double carbon".The development of a carbon emissions trading market is a necessary measure to implement the new development concept,and will help China to take the lead in the new round of international economic competition in the future.The study of China’s carbon emissions trading market is in line with the background of the times and the development trend of the countryMost of the existing articles on the factors influencing the price of carbon emissions trading in China have studied the influence of economic factors and fossil energy price factors on the price of carbon emissions trading,with most of the fossil energy prices chosen from coal,and most of the carbon emissions trading data chosen from local pilot carbon emissions trading markets.The paper investigates the correlation between fossil energy prices and the carbon emissions trading market,and introduces the CEA prices of the national carbon emissions trading market established in the Shanghai Environmental Energy Exchange in 2021 for comparison with the local pilot market.The study also explores the correlation between the price of fossil energy and the price of carbon emissions trading by constructing a VAR model and using impulse response analysis and variance decomposition analysis.The empirical results show that: firstly,the impact of fossil energy on carbon trading prices has both positive and negative effects in the short term,and the response to changes in carbon trading prices brought about by such shocks has a certain lag and continuity in the short term.Secondly,the impact of fossil energy prices on carbon trading prices in the currently established local pilot carbon trading markets has certain geographical characteristics.Third,in terms of the degree of impact of fossil energy prices on carbon trading prices,changes in natural gas prices have the greatest impact on changes in coal prices.The initial adjustment of China’s energy structure has begun to bear fruit,and the importance of natural gas in China’s production and life can be foreseen in the future.Fourthly,the national carbon trading market is still at its early stage of establishment,and the trading volume and activity is not as high as some of the earlier established local carbon trading markets,while the main fossil energy source in China is still coal,and the national carbon trading price is more susceptible to the influence of coal prices compared to the local ones.Fifthly,at present,China’s carbon trading price has less influence on the fluctuation of fossil energy prices,and the activity and scale of carbon trading market is still at the early stage of development,which also reflects that China’s carbon trading market has good development prospects and huge development space.The innovation of this paper mainly lies in the fact that the range of variables selected is wider,and the carbon trading data chosen covers a longer time span and a larger amount of data,which enables a more comprehensive study to be conducted.As China’s economic and social development and international status continue to rise,the volume and activity of carbon emissions trading in the national market is bound to increase,and the way it is priced will become more market-oriented,and may even have an impact on energy prices,so it is necessary to explore its relationship with fossil energy prices.