An analysis of the interactions between electricity, fossil fuel and carbon market prices in Guangdong, China

Liu, Xianbing; Jin, Zhen

doi:10.1016/j.esd.2020.01.008

Cited by 51 publications

(10 citation statements)

References 24 publications

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“…According to the chart of partial gain, there is a distinct time-varying correlation between EUA and Oil , which fluctuates up and down within the scope of 0.11–2.82. Our results are somewhat in line with the research of Reboredo, 41 which documented that the relation between the two markets was extremely weak, and are also similar to the work of Zhang and Sun, 32 Liu and Jin, 34 i.e., that fossil fuel prices have no impact on the short-term dynamics of the carbon price. In this condition, there is no doubt that it is difficult for investors to carry out portfolio risk management and the market management for policymakers.…”

Section: Empirical Analysissupporting

confidence: 92%

“…It documented that a positive shock to the crude oil prices has an initial positive effect on the EUA spot price, which later becomes negative. However, based on a co-integrated vector error correlation model, Liu and Jin 34 confirmed a long-running co-integration between carbon market prices and the price of diesel in Guangdong. But fossil fuel prices have no impact on the short term dynamics of carbon prices.…”

Section: Literature Reviewmentioning

confidence: 94%

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Time–frequency analysis of the interaction mechanism between European carbon and crude oil markets

Zhang

Yun

et al. 2021

Energy & Environment

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The joint behavior of internal and external system brings out a high complexity of the carbon and oil price interactions, such as non-linearity and multi-frequency. This paper innovatively proposed a time-frequency mechanism between carbon and oil markets from the two aspects of internal system and external factors, and introduced a novelty partial wavelet analytics to explore their dynamic multi-scale interactions. We selected the European carbon and Brent oil futures prices data from March 2009 to December 2020, with the consideration of several necessary control variables from the external surroundings. Our findings point to a stable and strong in-phase relationship between the two markets, with oil leading at medium and lower frequencies. However, the mutual leading relationships are especially sensitive during abnormal political events and periods of financial recession and global emergency, which are observed at different periods for intermediate horizons. What is more, the interactions are more diversified and feebler at short-timescale. Under the vision of carbon neutrality, these evidences provide invaluable guidance for regulators to structure a more flexible adjusting mechanism for the risk control of carbon markets, and also help investors to hedge risk aimed at different time horizons.

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Section: Empirical Analysissupporting

confidence: 92%

Section: Literature Reviewmentioning

confidence: 94%

Time–frequency analysis of the interaction mechanism between European carbon and crude oil markets

Zhang

Yun

et al. 2021

Energy & Environment

View full text Add to dashboard Cite

show abstract

“…But a closer assessment of the region's experience with ETS, as presented in Luo et al (2019), suggests that the ETS has only slightly increased the cost of fossil-fuels generation by 0.5%, and hence has limited influence on encouraging the use of less carbonintensive technologies in power generation. Similarly, Liu and Jin (2020) found that the carbon price had limited impact on increasing the cost of coal generation, and some large-scale and efficient coal-fired power plants even made profits, due mainly to generous emission allowance allocation.…”

Section: Power Sectormentioning

confidence: 99%

Explaining the slow progress of coal phase-out: The case of Guangdong-Hong Kong-Macao Greater Bay Region

et al. 2021

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Prompted by the urgency of climate change, this paper analyses the impediments for coal phase-out, by using the Greater Bay Region in China as a case study. Rather than factors specific to coal production, transport and consumption (e.g., subsidies, and vested interests), as suggested by existing literature, the analysis of this paper demonstrates that coal phase-out in the region has encountered a range of market (e.g., high gas price), infrastructure (such as, inadequate network), and regulatory (e.g., prolonged project approval) impediments; these impediments have hindered the effective deployment of alternative energy sources, raising concern about coal phase-out and its crippling impacts on the security of energy supply.Redressing these impediments is therefore a key priority for promoting a smooth coal phaseout in the region. This requires a mix of policies addressing two dimensions: 1) those aimed at squeezing out coal from the energy-mix to create room for alternative low-carbon energy sources; and 2) those aimed at supporting the uptake of these sources. Implementing these policies is however a challenging task as it relies on close-centre-local, and inter-and intraregional cooperation, especially in a resource-poor region with a disperse energy endowment.Achieving this is difficult because the energy policy process of the country has long been characterised by fragmented authority and territorial administrative divisions with a proclivity for local governments to work in isolation from each other.

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“…Yuan et al proposed three alternative designs of coal generation subsidies under the market reform circumstances to overcome the effects of stranded costs (Yuan et al, 2019). Liu and Jin identified the interactions among electricity, fossil fuel, and carbon market prices in Guangdong province, offering implications for the codevelopment of power market reform and emissions trading schemes (Liu and Jin, 2020). There have also been several studies analyzing how the new reform could influence various aspects of power system operation, such as demand-side management (Zhang et al, 2017), renewable energy integration (Guo et al, 2019b;Xu et al, 2018;Zhang et al, 2018), retail market operations (Bai et al, 2015;Peng and Tao, 2018), financial market construction (Fan and Qu, 2019), and interregional electricity transmission (Zeng et al, 2016a).…”

Section: Electricity Consumptionmentioning

confidence: 99%

Power market reform in China: Motivations, progress, and recommendations

et al. 2020

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An analysis of the interactions between electricity, fossil fuel and carbon market prices in Guangdong, China

Cited by 51 publications

References 24 publications

Time–frequency analysis of the interaction mechanism between European carbon and crude oil markets

Time–frequency analysis of the interaction mechanism between European carbon and crude oil markets

Explaining the slow progress of coal phase-out: The case of Guangdong-Hong Kong-Macao Greater Bay Region

Power market reform in China: Motivations, progress, and recommendations

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