Research on Price Linkage Mechanism between Electricity Market and Carbon Market from the Perspective of Energy Finance

Yaru Yang

GBP Proceedings Series, 2025, vol. 15, 28-34

Abstract: In recent years, growing global attention to sustainable development and climate change has significantly intensified the interconnection between the electricity market and the carbon market. From an energy finance perspective, understanding the mechanisms that link electricity and carbon prices is crucial for both theoretical research and practical policy-making. This paper investigates the underlying dynamics of electricity-carbon price linkage, examining how fluctuations in one market propagate to the other and identifying the primary factors that influence their interaction. Key determinants such as energy demand patterns, fuel price volatility, regulatory policies, carbon allowance allocation, and technological advancements in renewable energy are analyzed in detail. By revealing these interdependencies, the study provides insights into how market participants can better manage risk, optimize investment strategies, and enhance operational efficiency. Furthermore, the paper offers policy recommendations aimed at promoting coordinated development between the electricity and carbon markets, improving market transparency, and supporting the efficient allocation of energy resources. The findings contribute to the broader understanding of integrated energy markets and provide a foundation for informed decision-making in the context of sustainable energy transition.

Keywords: electricity market; carbon market; price linkage; energy finance; sustainable development; policy recommendations (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:axf:gbppsa:v:15:y:2025:i::p:28-34

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