Coordination between the energy-consumption permit trading scheme and carbon emissions trading: Evidence from China

Zhang, Yanfang; Wei, Jinpeng; Gao, Qi; Shi, Xunpeng; Zhou, Dequn

doi:10.1016/j.eneco.2022.106433

Cited by 22 publications

(12 citation statements)

References 50 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…High-energy-consuming enterprises engaged in thermal power generation, steelmaking, crude oil processing, and other industries are subject to both the carbon market and the energy consumption permits market. However, enterprises subject to double constraints may find it challenging to participate in energy consumption permit trading, since they can achieve energy saving and emission reduction through carbon trading [32]. This overlap between the energy consumption permits market and the carbon market poses a duplication problem.…”

Section: Discussionmentioning

confidence: 99%

“…Li and Zhu [31] found that the ECPTS and CETS are highly interrelated, and if CEPs and ECPs complement and engage in exchange with each other, this will promote the synergistic development of the two markets. Zhang et al [32] prioritized the allocation efficiency of ECPs over carbon allowances, the former being more conducive to energy saving and emission reduction. Wang et al [6] pointed out that the joint trading system generates more economic-environmental benefits.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

A Comparative Analysis of Separate and Joint Environmental Rights Trading Markets in China

Luo

Chen

2023

Sustainability

View full text Add to dashboard Cite

The structuring of effective market-based environmental rights instruments can help to achieve energy efficiency and emission reduction goals while minimizing economic costs. As part of the global drive for sustainable development, pollution rights, carbon emission permits, and white certificates have become widely used as environmental rights trading schemes in many countries. However, interactions between environmental rights can create challenges. For instance, China has established a national carbon market, which it aims to connect with the energy consumption permit trading market. The effectiveness of separate and joint markets in achieving win-win outcomes is an area that requires further research. To address this question, we employed a mixed-integer linear programming model to simulate the potential incremental outputs and energy savings of 16 high-energy-consuming and high-emission industries in China from 2010 to 2019. Our findings indicate that the joint energy consumption permits and the carbon emission permits market yield the greatest economic benefits, but they lack a distinct advantage compared to the separate carbon market. Additionally, industries face less pressure to ensure energy savings in the joint market. The energy saving ratio of the joint market is 0.1% lower than that of the separate carbon market. We also found that the construction of a joint market will incur additional costs for firms and governments. Based on our benefit and cost analysis, we propose that governance subjects of pilot cities prioritize the establishment of the carbon market and not the rapid expansion of the pilot-level scope of energy consumption permits.

show abstract

Section: Discussionmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

A Comparative Analysis of Separate and Joint Environmental Rights Trading Markets in China

Luo

Chen

2023

Sustainability

View full text Add to dashboard Cite

show abstract

“…Their methodology involved the utilization of a differences-in-differences approach to evaluate the influence of ETS on carbon emissions and economic growth while scrutinizing its potential synergistic effects on these two aspects. In a separate study conducted by Zhang et al (2022) [ 36 ], they devised an energy consumption permit allocation scheme grounded in principles of coordination, efficiency, and fairness. This scheme leveraged game theory alongside fixed cost allocation models and leader-follower game models.…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of China’s carbon market price fluctuation and international carbon credit financing mechanism using random forest model

Song

2024

PLoS ONE

View full text Add to dashboard Cite

This study aims to investigate the price changes in the carbon trading market and the development of international carbon credits in-depth. To achieve this goal, operational principles of the international carbon credit financing mechanism are considered, and time series models were employed to forecast carbon trading prices. Specifically, an ARIMA(1,1,1)-GARCH(1,1) model, which combines the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) and Autoregressive Integrated Moving Average (ARIMA) models, is established. Additionally, a multivariate dynamic regression Autoregressive Integrated Moving Average with Exogenous Inputs (ARIMAX) model is utilized. In tandem with the modeling, a data index system is developed, encompassing various factors that influence carbon market trading prices. The random forest algorithm is then applied for feature selection, effectively identifying features with high scores and eliminating low-score features. The research findings reveal that the ARIMAX Least Absolute Shrinkage and Selection Operator (LASSO) model exhibits high forecasting accuracy for time series data. The model’s Mean Squared Error, Root Mean Squared Error, and Mean Absolute Error are reported as 0.022, 0.1344, and 0.1543, respectively, approaching zero and surpassing other evaluation models in predictive accuracy. The goodness of fit for the national carbon market price forecasting model is calculated as 0.9567, indicating that the selected features strongly explain the trading prices of the carbon emission rights market. This study introduces innovation by conducting a comprehensive analysis of multi-dimensional data and leveraging the random forest model to explore non-linear relationships among data. This approach offers a novel solution for investigating the complex relationship between the carbon market and the carbon credit financing mechanism.

show abstract

“…We define the rate R B as the liquid-asset market rate and specify the term A as the loan repayments from the green and carbon-intensive borrowing firms. Eq (6) expresses the insurer's equity as a capped call option in a hybrid position. The first term on the right-hand side is the insurer's total equity value, explicitly…”

Section: Plos Onementioning

confidence: 99%

“…Furthermore, green finance serves as a crucial avenue for advancing sustainable development. Integrating firms’ green trades into the regulatory cap-and-trade mechanism can contribute to enhancing sustainability efficiency [ 4 , 6 ]. Pursuing multiple objectives that align with environmental enhancement is imperative to achieve sustainable insurance operations.…”

Section: Introductionmentioning

confidence: 99%

Balancing equity and policyholder protection: Assessing insurer’s interests in green lending under cap-and-trade regulations

Chen,

Zhao,

Chiu

et al. 2023

PLoS ONE

View full text Add to dashboard Cite

This paper presents a contingent claim model designed to assess an insurer’s equity within the framework of carbon trading regulations imposed on borrowing firms while also considering the integration of green lending. The development of this model is particularly relevant for regions with established carbon trading markets, with a specific focus on the post-period following the 2015 Paris Agreement concerning climate change. We focus on shareholders and policyholders to optimize equity and ensure maximum protection. Strict caps in cap-and-trade harm interest margins, reducing guaranteed rates for equity maximization and compromising policyholder protection. Government intervention through sustainable production carbon trading hinders win-win outcomes. Green subsidies can improve insurer margins, but achieving win-win solutions remains challenging. A collective approach is needed to share sustainable production and finance benefits among diverse economic sectors.

show abstract

Coordination between the energy-consumption permit trading scheme and carbon emissions trading: Evidence from China

Cited by 22 publications

References 50 publications

A Comparative Analysis of Separate and Joint Environmental Rights Trading Markets in China

A Comparative Analysis of Separate and Joint Environmental Rights Trading Markets in China

Analysis of China’s carbon market price fluctuation and international carbon credit financing mechanism using random forest model

Balancing equity and policyholder protection: Assessing insurer’s interests in green lending under cap-and-trade regulations

Contact Info

Product

Resources

About