Network Features of the EU Carbon Trade System: An Evolutionary Perspective

Yinpeng Liu, Xiangyun Gao and Jianfeng Guo
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Yinpeng Liu: Institute of Science and Development, Chinese Academy of Sciences, Beijing 100190, China
Xiangyun Gao: School of Humanities and Economic Management, China University of Geosciences, Beijing 100083, China
Jianfeng Guo: Institute of Science and Development, Chinese Academy of Sciences, Beijing 100190, China

Energies, 2018, vol. 11, issue 6, 1-16

Abstract: In this paper, a network model is constructed using real trading data from the EU carbon market. Metric indicators are then introduced to measure the network, and the economic meanings of the indicators are discussed. By integrating time windows with the network model, three types of network features are examined: growth features, structural features, and scale-free features. The growth pattern of the carbon trading network is then analyzed. As the market grow, the geodesic distances become shorter and the clustering coefficients become larger. The trends of these two indicators suggest that the market is evolving towards efficiency; however, their tiny changes are insufficient to have significant impact. By modeling the heterogeneity of the carbon trading network, we find that the trading relationships between firms obey a broken power law model, which consists of two power law models. The broken power law model can be approximately defined as a traditional power law but with a longer tail in distribution. Furthermore, we find that the model is valid for most of the time of both phases, the model only invalid when the market approaches a high growth rate.

Keywords: emission trading scheme; carbon market; network analysis; network features; scale-free network (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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