Construction of a carbon price benchmark in China—analysis of eight pilot markets

Yang, Jun; Dong, Hanghang; Shackman, Joshua D.; Yuan, Jialu

Construction of a carbon price benchmark in China—analysis of eight pilot markets

2022

Yang, Jun | Dong, Hanghang | Shackman, Joshua D. | Yuan, Jialu

The fluctuation of the carbon price and its related components can effectively reflect the overall economy. This paper explores the fluctuation of the carbon price and its influencing factors. First, the ensemble empirical mode decomposition (EEMD) method is used to decompose the carbon price series of eight pilot projects at multiple timescales. Second, according to the historical trading records in the eight pilot projects, this paper constructs a national carbon price under a variety of scenarios. Finally, based on the average of the eight pilot market daily trading datasets, the national carbon price is constructed, and a short-term prediction is made. The results show that: (1) the pilot projects in Beijing and Hubei are susceptible to short-term external factors, and Beijing’s pilot internal market mechanism has a large impact on the carbon price; (2) in most scenarios, the national price fluctuates, with the highest carbon price approaching 70 CNY/tCO2 and the lowest falling below 10 CNY/tCO2; and (3) China’s carbon price is still has ample room to rise in the future. This paper provides a theoretical basis and practical guidance for the prediction of carbon prices in China.

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