Template-type: ReDIF-Paper 1.0
Author-Name: Chia-Lin Chang
Author-Workplace-Name: Department of Applied economics, Department of Finance National Chung Hsing University, Taiwan.

Author-Name: Te-Ke Mai
Author-Workplace-Name:
 Department of Economics National Tsing Hua University, Taiwan.

Author-Name:
 Michael McAleer
Author-Workplace-Name:
 Department of Quantitative Finance National Tsing Hua University, Taiwan and Econometric Institute Erasmus School of 
	Economics Erasmus University Rotterdam, The Netherlands and Department of Quantitative Economics Complutense University of 
	Madrid, Spain And Institute of Advanced Sciences Yokohama National University, Japan.
Title: Pricing carbon emissions in China
Abstract: The purpose of the paper is to provide a clear mechanism for determining carbon emissions pricing in China as a guide to how carbon emissions might 
	be mitigated to reduce fossil fuel pollution. The Chinese Government has promoted the development of clean energy, including hydroelectric power, wind 
	power, and solar energy generation. In order to involve companies in carbon emissions control, a series of regional and provincial carbon markets have 
	been established since 2013. Since China’s carbon market was established in 2013 and mainly run domestically, and not necessarily using market 
	principles, there has been almost no research on China’s carbon price and volatility. This paper provides an introduction to China’s regional and 
	provincial carbon markets, proposes how to establish a national market for pricing carbon emissions, discusses how and when these markets might be 
	established, how they might perform, and the subsequent prices for China’s regional and national carbon markets. Power generation in manufacturing 
	consumes more than other industries, with more than 40% of total coal consumption. Apart from manufacturing, the northern China heating system also 
	relies on fossil fuels, mainly coal, which causes serious pollution. In order to understand the regional markets well, it is necessary to analyze the 
	energy structure in these regions. Coal is the primary energy source in China, so that provinces that rely heavily on coal receive a greater number of 
	carbon emissions permits from the Chinese Government. In order to establish a national carbon market for China, a detailed analysis of eight important 
	regional markets will be presented. The four largest energy markets, namely Guangdong, Shanghai, Shenzhen and Hubei, traded around 82% of the total 
	volume and 85% of the total value of the seven markets in 2017, as the industry structure of the western area is different from that of the eastern 
	area. The China National Development and Reform Commission has proposed a national carbon market, which can attract investors and companies to 
	participate in carbon emissions trading. This importantissue will be investigated in the paper.
Classification-JEL: C22, C58, G12, Q35, Q48.
Keywords: Pricing chinese carbon emissions, National pricing policy, Energy, Volatility, Energy finance, Provincial decisions.
Length: 57 pages 
Creation-Date: 2018-01
Number: 2018-03
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae1803.txt
File-URL: https://eprints.ucm.es/id/eprint/46189/1/1803.pdf
File-Format: Application/pdf
Handle: RePEc:ucm:doicae:1803