Establishing National Carbon Emission Prices for China

Thumbnail Image
Official URL
Full text at PDC
Publication Date
Advisors (or tutors)
Journal Title
Journal ISSN
Volume Title
Facultad de CC Económicas y Empresariales. Instituto Complutense de Análisis Económico (ICAE)
Google Scholar
Research Projects
Organizational Units
Journal Issue
The purpose of the paper is to establish national carbon emissions prices for the People’s Republic of China, which is one of the world’s largest producers of carbon emissions. Several measures have been undertaken to address climate change in China, including the establishment of a carbon trading system. Since 2013, eight regional carbon emissions markets have been established, namely Beijing, Shanghai, Guangdong, Shenzhen, Tianjin, Chongqing, Hubei and Fujian. The Central Government announced a national carbon emissions market, with power generation as the first industry to be considered. However, as carbon emissions prices in the eight regional markets are very different, for a variety of administrative reasons, it is essential to create a procedure for establishing a national carbon emissions price. The regional markets are pioneers, and their experience will play important roles in establishing a national carbon emissions market, with national prices based on regional prices, turnovers and volumes. The paper considers two sources of regional data for China’s carbon allowances, which are based on primary and secondary data sources, and compares their relative strengths and weaknesses. The paper establishes national carbon emissions prices based on the primary and secondary regional prices, for the first time, and compares both national prices and regional prices against each other. The carbon emission prices in Hubei, Guangdong, Shenzhen and Tianjin are highly correlated with the national prices based on the primary and secondary sources. Establishing national carbon emissions prices should be very helpful for the national carbon emissions market that is under construction in China, as well as for other regions and countries worldwide.
Unesco subjects
Bohringer, C., A. Lange and T.F. Rutherford (2014), Optimal emission pricing in the presence of international spillover: Decomposing leakage and terms-of-trade motives, Journal of Public Economics, 110, 101-111. Cetin, U. and M. Verschuere (2009), Pricing and hedging in carbon emissions markets, International Journal of Theoretical and Applied Finance, 12(7), 949-967. Chang, C.-L. and M. McAleer (2018), The fiction of full BEKK: Pricing fossil fuels and carbon emissions, to appear in Finance Research Letters. ( Chang, C.-L., M. McAleer and G.D. Zuo (2017), Volatility spillovers and causality of carbon emissions, oil and coal spot and futures for the EU and USA, Sustainability, 9(10:1789), 1-21. Dhakal, S. (2009), Urban energy use and carbon emissions from cities in China and policy implications, Energy Policy, 37(11), 4208-4219. Lia, J. and M. Colombier (2008), Managing carbon emissions in China through building energy efficiency, Journal of Environmental Management, 90(8), 2436-2447. Lo, A.Y. (2013), Carbon trading in a socialist market economy: Can China make a difference, Ecological Economics, 87, 72-74. Lo, A.Y. (2016), Challenges to the development of carbon markets in China, Climate Policy, 16, 109-124. Reboredo, J.C. (2014), Volatility spillovers between the oil market and the European Union carbon emission market, Economic Modelling, 36, 229-234. Zhang, X.-P. and X.-M. Cheng (2009), Energy consumption, carbon emissions, and economic growth in China, Ecological Economics, 26(10), 2706-2712.