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The response of the Beijing carbon emissions allowance price (BJC) to macroeconomic and energy price indices

Shihong Zeng, Xin Nan, Chao Liu and Jiuying Chen

Energy Policy, 2017, vol. 106, issue C, 111-121

Abstract: In 2013, China opened pilot carbon emission trading markets in seven provinces, where carbon emission allowances have now been traded for more than two years. In this paper, we employ a structural VAR model and the price of the Beijing carbon emission allowance to study the dynamic relationships among the price of the carbon emission allowance, economic development and the price of energy. This paper's data cover the period from April 2, 2014 to November 6, 2015. This paper provides information that will be helpful to both investors and governmental policy makers. The results show that (1) an increase of one standard deviation in the coal price leads to an initial increase of approximately 0.1% in the Beijing carbon price. After 2 days, there is a decrease of less than 0.1%, and the price gradually increases by approximately 0.1% after 30 days; (2) the price of the Beijing carbon emission allowance is mainly affected by its own historical price; (3) the Beijing carbon emission allowance price, crude oil price, natural gas price and economic development have positive – albeit non-significant – correlations.

Keywords: Q21; Q41; Q43; Q56; Q59; Beijing; carbon emissions allowance; price; SVAR approach (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.enpol.2017.03.046

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