Valuing Carbon Assets for Sustainability: A Dual-Approach Assessment of China’s Certified Emission Reductions

Jiawen Liu (), Yue Liu (), Jiayi Wang, Xinyue Chen and Liyuan Deng
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Jiawen Liu: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China
Yue Liu: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China
Jiayi Wang: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China
Xinyue Chen: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China
Liyuan Deng: School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China

Sustainability, 2025, vol. 17, issue 11, 1-20

Abstract: As China’s voluntary greenhouse gas emission reduction mechanism undergoes institutional revitalization, the accurate valuation of carbon assets such as China Certified Emission Reductions (CCERs) becomes increasingly critical for effective climate finance and sustainability-oriented investment. This study proposes an integrated value assessment model for CCERs that combines Long Short-Term Memory (LSTM) neural network-based carbon price forecasting with both the discounted net cash flow method and the Black–Scholes option pricing framework. Applying this model to a wind power project, the study found that the practical value of CCERs, derived from verified emission reductions, significantly exceeds their market option value, underscoring the economic and environmental viability of such projects. By distinguishing between the realized and potential values of carbon credits, this research offers a comprehensive tool for carbon asset valuation that supports corporate carbon management and policy development. The framework contributes to the growing literature on sustainable finance by aligning carbon asset pricing with long-term climate goals and enhancing transparency in carbon markets.

Keywords: carbon asset valuation; sustainability; CCERs; neural networks; option pricing model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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