Effect Mechanism Research of Carbon Price Drivers in China—A Case Study of Shenzhen

Jiongwen Chen () and Jinsuo Zhang
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Jiongwen Chen: College of Energy Engineering, Xi’an University of Science and Technology, Xi’an 710054, China
Jinsuo Zhang: College of Energy Engineering, Xi’an University of Science and Technology, Xi’an 710054, China

IJERPH, 2022, vol. 19, issue 17, 1-17

Abstract: Revealing the effect mechanism of carbon price drivers is the basis to establish the pricing mechanism of carbon emission exchange, which also promotes the development of the carbon emission exchange market and can reduce the investment risk. Based on the previous research, the cointegration test, Granger causality test, and ridge regression estimate are used to analyze the effect mechanism between the domestic carbon price and its drivers. Johansen’s cointegration analysis reveals that there is a long-term equilibrium relationship between the domestic carbon price and energy price, industrial development level, climate change, and financial prosperity. Ridge regression estimates reveal that the international spot price of thermal coal in the ARA port and the spot price of Brent crude oil in Britain are negatively correlated with the domestic carbon price, while CER futures price is positively correlated with the domestic carbon price. There is a linkage between the international carbon price and the domestic carbon price. Since 2017, the domestic carbon price has been lower than the equilibrium value, and the value of carbon emission rights has been underestimated. With the continuous improvement of the domestic carbon market, the carbon price will rise and fluctuate around the equilibrium price in the future.

Keywords: carbon emission exchange; price drivers; effect mechanism; cointegration test; ridge regression (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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