Climate for Business: Opportunities for Financial Institutions and Sustainable Development in the Chinese Carbon Market

Lo, Acy; Yu, Xiang

doi:10.1002/sd.1597

Cited by 18 publications

(13 citation statements)

References 22 publications

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“…As Zhang [5] has indicated, emission allowances are over- with little interest in turning it into an investment [21]. In fact, there is a general lack of knowledge about how carbon markets and trading systems work [19,38,86].…”

Section: Discussionmentioning

confidence: 99%

Emission trading and carbon market performance in Shenzhen, China

Cong

2017

Applied Energy

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162

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China has developed its own domestic carbon markets by setting up emission trading schemes. This study addresses concerns about the functioning of these schemes and the financial performance of the Chinese carbon market. It aims to assess an actual outcome of this policy intervention, i.e. trading records, which were used in our analysis to examine a key financial property of the allowance-based market in Shenzhen. In a mature market, assets that incur higher risks are likely to yield higher returns, i.e. a positive relationship. To examine this property, we solicited historical data on the price and trading volume of emission allowances. We statistically estimated the degree of volatility in the Shenzhen market andits relationship with expected return premium. We found that the rate of return was negatively associated with expected risk. This stands at odds with the usual expectation in the financial market and the prediction of asset pricing theory. Also, kurtosis in trading volume was excessively high and its fluctuations were highly concentrated. We discuss these findings in terms of market liquidity and information uncertainties, and offer some policy recommendations. More regulatory attention and economic fixes are needed to improve market efficiency and eliminate sources of market distortions.

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Section: Discussionmentioning

confidence: 99%

Emission trading and carbon market performance in Shenzhen, China

Cong

2017

Applied Energy

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162

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“…However, the pace of development of the carbon finance in various pilot projects is still slow, making the carbon market fall short of sustained development momentum [27]. At present, the carbon finance of China still lacks detailed institutional arrangements, which makes financial supervision of the carbon market more difficult [57], and the government-led carbon finance market still exacerbates the characteristics of the CCM with poor liquidity and unstable carbon quota prices [58]. Sufficient liquidity of market and accuracy of carbon pricing are essential factors to ensure the smooth operation of the carbon market [59].…”

Section: Trading Conditions In Pilot Areamentioning

confidence: 99%

“…Whether the willingness of the two matchmaking parties is strong is also a key factor for the realization of the connection of carbon markets. The above factors may create an insurmountable obstacle to the connection between the CCM and the international carbon market [29,35,42,50,58,62].…”

Section: Improving Legal Basis Of the Carbon Marketmentioning

confidence: 99%

China’s Carbon Market Development and Carbon Market Connection: A Literature Review

Hua

Dong

2019

Energies

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As a responsible world power, China has established quantitative carbon emission reduction targets and started to establish carbon trading pilots in 2013. Successfully connection and a certain size of the carbon market can further enhance the liquidity of carbon allowances and, to a certain extent, contribute to the enthusiasm of enterprises to participate. This paper gives an overview of the past operational development of China’s eight carbon market pilots, the current problems in the national carbon market, the elements that need to be improved during the establishment process, and the feasibility of future connection between China’s carbon market. In addition, the international carbon market was summarized and analyzed. We found that, compared with the already mature carbon market in the world, there is still a big gap between China and these countries’ carbon market in various respects, such as the carbon price formation mechanism, the carbon quota allocation, carbon emission coverage sources, and legal and policy systems. Thus, China should manifest the pricing mechanism, unify the allocation of carbon quotas, cover the sources of emissions, introduce clear laws and regulations in the construction of the carbon market, all these will ensure the smooth operation of the national carbon market.

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“…"Putting a price on carbon is considered a crucial step for China's endeavor to harness market forces to reduce its energy consumption and carbon emissions and genuinely transform into a low-carbon economy" (Zhang 2015a: S5). This claim is often repeated and has been adopted by many proponents of a carbon market (Lo and Yu 2015). How, though, is a price actually put on carbon?…”

Section: How Is Carbon Pr Icing Ac Hieved In T He Hubei Ets Pilot?mentioning

confidence: 99%

The Value of a Valuation Perspective for Theorizing about Social Change and Climate Change: A Study on Carbon Pricing in China

Engels

Wang

2018

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This study combines three purposes: to advance a valuation perspective for theorizing about social change and climate change; to contribute to the general debate on pricing as the dominant policy to meet climate mitigation goals; to improve our understanding of potential decarbonization processes in China. We apply a valuation perspective to an in-depth case study of an emerging carbon market in Hubei Province in Central China. The study builds on original data collected during field trips to Hubei (2014, 2015) and additional documents covering recent developments in the Chinese carbon market. It shows how putting a price on carbon in China emerges as the outcome of a long-term cultural and institutional process in which China’s high-carbon growth model is increasingly contested. We emphasize the work that was required before a carbon price could emerge as a market price, and focus on the uncertainty that needed to be overcome in the complex multilevel Chinese system. We suggest that China’s introduction of low-carbon policies are a side effect of other political, economic and social pressures, and that it is largely facilitated because such policies are consistent with many other changes that are occurring simultaneously both in the Chinese context and globally.

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Climate for Business: Opportunities for Financial Institutions and Sustainable Development in the Chinese Carbon Market

Cited by 18 publications

References 22 publications

Emission trading and carbon market performance in Shenzhen, China

Emission trading and carbon market performance in Shenzhen, China

China’s Carbon Market Development and Carbon Market Connection: A Literature Review

The Value of a Valuation Perspective for Theorizing about Social Change and Climate Change: A Study on Carbon Pricing in China

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