The Influencing Factors of the Carbon Trading Price: A Case of China against a “Double Carbon” Background

Abstract

The Carbon trading price (CTP) can best reflect the fluctuations of the carbon trading market. This paper comprehensively analyzes the CTP mechanism of China’s carbon trading market, discusses the main factors affecting China’s CTP, which include macroeconomic factors, energy price factors, policy factors, and environmental factors, and provides three hypotheses. In order to highlight and test the three hypotheses about the CTP, five representative carbon trading pilot markets were included: Beijing, Shenzhen, Shanghai, Hubei, and Guangdong, and the daily average price data (over years) were adapted from January 2017 to December 2021, using a dynamic heterogeneous panel PMG model. The current paper selects the China air quality index (AQI), Bohai-Rim steam-coal price index (BSPI), Liquefied natural gas index (LNGI), and the Shanghai stock exchange industrial index (SSEII) as the explanatory variables. The empirical results show that there is a long-term equilibrium relationship between the CTP, AQI, energy price, and macroeconomics. Strengthening environmental governance, optimizing the energy structure, and expanding the carbon trading market coverage should be adopted to improve the China carbon emission trade exchange (CCETE) and stabilize the CTP.

Urban Carbon Price Forecasting by Fusing Remote Sensing Images and Historical Price Data

“…In the carbon market, high-emission companies have to acquire enough carbon emission allowances to counterbalance their carbon emissions [4]. Forest carbon sequestration products are the carbon emission allowances in the carbon market [5,8]. This indicates that forest carbon sequestration projects tend to attract more investments as carbon prices rise, which, in turn, enhances their carbon sequestration capacity [11].…”

“…In summary, forest carbon trading mechanisms in carbon markets can foster forest carbon sequestration and aid carbon neutrality, as evidenced by numerous studies [11][12][13]42]. Accurate carbon price prediction, therefore, has caused extensive concerns in forest science [8,[11][12][13].…”

“…In addition, the main reason for offsetting carbon emissions is to enhance forest carbon sequestration abilities [7]. This framework makes the urban carbon price, together with forest carbon sequestration products, the foundation of the ETS [8]. As a result, the urban carbon price serves as a regulatory tool to not only encourage companies to reduce carbon emissions but also guide governments in formulating policies such as these for forest protection [9][10][11][12].…”

“…Therefore, accurate carbon price prediction is not only useful for reducing business risk but also serves as a reference for governments in formulating carbon policies, including forest carbon sink management [13]. Consequentially, accurate carbon price forecasting is a popular research topic in forest science [8,11,12].…”

Research on Carbon Allowance Price Non-Linear Structure Characteristics and Regime Switching Mechanism in China's Carbon Market

“…Compared with the carbon markets in the US and Europe, the problems of convergent trading decisions and limited inter-firm liquidity are more pronounced in the pilot carbon markets except Hubei, which is one of the reasons why the CAP volatility in the carbon market departs from the normal level [28]. In terms of external influences factors, the news, government policies, the development of clean energy, stock market, electricity prices and the COVID-19 outbreak have been shown to have a significant impact on CAP trend [29][30][31] and it is clear that the role of these influencing factors is heterogeneous in different carbon markets [32][33][34]. Looking further at individual carbon markets, the researches on the Shenzhen and Hubei carbon markets is more abundant.…”