How Will Policies of China’s CO2 ETS Affect its Carbon Price: Evidence from Chinese Pilot Regions

Yang, Baochen; Liu, Chuanze; Gou, Zehao; Man, Jiacheng; Su, Yunpeng

doi:10.3390/su10030605

Cited by 29 publications

(17 citation statements)

References 37 publications

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“…The analysis of market highlights that the carbon price is closely linked to the supply and demand of carbon allowance. The supply is determined by Government policies, while the demand is determined by the regional economic pattern and energy structure (Yang et al 2018). The development of an ETS is more complex in a vast country with regional differences (Böhringer et al 2014).…”

Section: Literature Reviewmentioning

confidence: 99%

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

D’Adamo

2018

Social Sciences

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Photovoltaic (PV) resource drives the clean global economy of the future. Its sustainability is widely confirmed in literature, however some countries present a growth very low in the last years. A new policy proposal is examined in this work. It aims to stimulate a new diffusion of PV plants in mature markets (e.g., Italy) regarding residential consumers. The subsidy is given to the amount of energy produced by PV plant for a period of 20 years (equal to its lifetime) and its value is calculated according to the scheme of European Emissions Trading System (EU ETS). Discounted Cash Flow (DCF) is used as economic method and two indexes are proposed: Net Present Value (NPV) and Discounted Payback Time (DPBT). The baseline case studies vary in function of two variables; (i) the share of self-consumption (30%, 40% and 50%) and (ii) the price of emissions avoided (10, 35 and 70 € per ton of CO2eq). Results confirms the environmental advantages of PV sources as alternative to the use of fossil fuels (685 gCO2eq/kWh) and economic opportunities are verified in several scenarios (from 48 €/kW to 1357 €/kW). In particular, the profitability of PV systems is greater with a subsidized rate of fiscal deduction of 50% in comparison to subsidies with a value of carbon dioxide lower than 18.50 €/tCO2eq.

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Section: Literature Reviewmentioning

confidence: 99%

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

D’Adamo

2018

Social Sciences

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“…This study contributes to the recent literature [7][8][9]40,41] in three ways. First, we review past studies, reveal errors in their results, and examine how to use VECM modeling correctly.…”

Section: Discussionmentioning

confidence: 86%

The Price Determinants of the EU Allowance in the EU Emissions Trading Scheme

2018

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The Kyoto Protocol came into effect in 1997 to curb greenhouse gas (GHG) emissions and to address the problem of climate change. The Protocol includes a market-based mechanism designed to offset GHG emissions, called the emissions trading scheme (ETS), allowing companies to “trade” their shortage or surplus allowance. This study examines the determinants of the EU allowance (EUA) price in Phase 3 of the EU ETS (2013–2017). First, the causality between the EUA price and other variables is determined using a Granger causality test. Second, the correlation between the EUA price and each variable is measured using a VECM estimation and an impulse response function. Finally, the relative effect of each variable on the EUA price is determined using a forecast error variance decomposition. The results show that the EUA price has a causal effect on the prices of electricity and natural gas. Second, all variables, except the minimum temperature, show a positive relationship with the EUA price. Furthermore, when unexpected shocks occur, the EUA price shows the highest response to its past price, followed by the electricity price. Third, the past EUA price has the most influence on the EUA price, followed by the coal price.

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“…As a core issue of the carbon market mechanism, accurate forecasting of the carbon price can develop an efficient carbon pricing mechanism, and also help investors to avoid market risks and to increase returns. As an emerging policy-based artificial market, the carbon market is characterized by strong sensitivity to policy shocks, especially carbon dioxide (CO2) reduction policies and carbon quota policies [2]. Therefore, as for the certain pricing framework, the prediction of the carbon price should not only follow the basic pricing method of general financial assets, but also reflect the special driving mechanism of the carbon price.…”

Section: Introductionmentioning

confidence: 99%

A Novel Extended Higher-Order Moment Multi-Factor Framework for Forecasting the Carbon Price: Testing on the Multilayer Long Short-Term Memory Network

Yun

Zhang

et al. 2020

Sustainability

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Predicting the carbon price accurately can not only promote the sustainability of the carbon market and the price driving mechanism of carbon emissions, but can also help investors avoid market risks and increase returns. However, previous research has only focused on the low-order moment perspective of the returns for predicting the carbon price, while ignoring the shock of extreme events and market asymmetry originating from its pricing factor markets. In this paper, a novel extended higher-order moment multi-factor framework (EHM-APT) was formed to improve the prediction and to capture the driving mechanism of the carbon price. Furthermore, a multi-layer and multi-variable Long Short-Term Memory Network (Multi-LSTM) model was constructed so that the parameters and structure could be determined experimentally for testing the performance of the proposed framework. The results show that the pricing framework considers the shock of extreme events and market asymmetry and can improve the prediction compared with a framework that does not consider the shock of higher-order moment terms. Additionally, the Multi-LSTM model is more competitive for prediction than other benchmark models. This conclusion proves the rationality and accuracy of the proposed framework. The application of the pricing framework encourages investors and financial institutions to pay more attention to the pricing factor of extreme events and market asymmetry for accurate price prediction and investment analysis.

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How Will Policies of China’s CO2 ETS Affect its Carbon Price: Evidence from Chinese Pilot Regions

Cited by 29 publications

References 37 publications

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

The Profitability of Residential Photovoltaic Systems. A New Scheme of Subsidies Based on the Price of CO2 in a Developed PV Market

The Price Determinants of the EU Allowance in the EU Emissions Trading Scheme

A Novel Extended Higher-Order Moment Multi-Factor Framework for Forecasting the Carbon Price: Testing on the Multilayer Long Short-Term Memory Network

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