Carbon Price Forecasting and Market Characteristics Analysis in China: An Integrated Approach Using Overall and Market-Specific Models

Weibao Sun, Yafang Gao (), Xuemei Yang, Yalong Zhang and Haolin Hu
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Weibao Sun: College of Tourism, Northwest Normal University, Lanzhou 730070, China
Yafang Gao: College of Tourism, Northwest Normal University, Lanzhou 730070, China
Xuemei Yang: School of Tourism, Lanzhou University of Arts and Science, Lanzhou 730030, China
Yalong Zhang: School of Geographic Sciences, Qinghai Normal University, Xining 810008, China
Haolin Hu: College of Tourism, Northwest Normal University, Lanzhou 730070, China

Sustainability, 2025, vol. 17, issue 12, 1-27

Abstract: Carbon markets play a pivotal role in achieving carbon peaking targets, with accurate price forecasting being essential for effective policymaking and corporate decision making. This study develops an integrated forecasting framework, combining an overall market model and a market-specific model, to predict carbon price trends in China from 2025 to 2026, while examining inter-market heterogeneity across eight regional markets. The overall market forecast reveals a fluctuating upward trend in the national carbon price over the next two years. Market-specific forecasts highlight significant disparities in price trends, as follows: the Shanghai and Guangzhou markets are projected to experience faster growth and the Beijing market to maintain stable prices, while the Tianjin and Chongqing markets exhibit more moderate increases. These disparities reflect the profound influence of regional economic levels, policy enforcement, and market maturity on carbon market development. By incorporating seasonal fluctuations and stochastic disturbances, we construct a forecasting model aligned with historical data dynamics and achieve differentiated forecasts through the analysis of historical price levels across markets, addressing the limitations of uniform target pricing in prior studies. These findings offer actionable insights for carbon market participants and policymakers, providing a robust foundation for designing differentiated carbon pricing policies to support China’s carbon peaking objectives.

Keywords: carbon price forecasting; China’s carbon market; market heterogeneity; overall market model; market-specific 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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