Abstract

Climate change is a global issue faced with human beings，and also highlights the conflicts between economic development and ecological environment. Mitigating global warming through accelerating the reduction of carbon emission has become a global consensus. Under this era background，a series of typical agreements in global climate field have provided political framework and legal basis for global carbon emission trading system，Such as the United Nations Framework Convention on Climate Change，the Kyoto Protocol，the Bali Roadmap，the Copenhagen Accord，the Paris Agreement and so on. These agreements also accelerate the international cooperation in global climate field and the steps of carbon emission reduction，and promote the construction and development of global carbon trading markets. In the global attempts of reducing carbon emission，European Union Emissions Trading System （EU ETS），was first established in 2005 and now becomes the most successful emission trading system with largest trading volume and highest market value. In addition，as the effects brought by negative externalities of climate change deepen，developed countries，like America，Canada and Australia，are positively making preparations to build and improve their own carbon emission trading markets. As the largest emitter of greenhouse gases and the country with greatest potential of emission reduction，China’s national carbon emission trading system is developing at full speed under the constraints of international environment and climate conventions. But carbon emission right，as a special commodity，its trading price fluctuates according to market supply and demand，regardless of under which carbon emission trading system. The trend of trading price directly affects the carbon price prediction and the risk measurement made by the participants in trading market. More importantly，it concerns the efficiency of emission reduction and the effectiveness of the carbon emission trading market. Therefore，the price mechanism is the core issue in carbon emission trading.

Based on the above era background，this book takes the price mechanism of emisson trading system as the research object. Based on the overall grasp of the other carbon emission trading systems and the core mechanism of the EU ETS，a systematic analysis on the price formation mechanism，price operation mechanism and price supervision mechanism of EU ETS is carried out，focusing on the analysis on the fluctuations，influencing factors and influencing mechanisms of EU ETS carbon emission trading prices，and further locking the research object in the European Union Allowance （EUA） and Certification Emission Reduction （CER） for in-depth analysis on the difference of the price correlation between the two types of trading products. This analysis，to a certain extent，makes up for the lack of attention to the simultaneous research of two types of trading products in the existing research field，and through the method of comparative research，it is clear which future development should be focused on the future prices and spot prices of EUA and CER. In terms of data selection，the author selected all the data in the second stage of EU ETS and the latest data in the third stage as of the writing of this book. So the analysis on the two types of trading products in this book is based on the newest and most comprehensive data with a wide time span，which is rare in similar studies. Taking EU ETS as a reference，this book discusses the overall design of China’s carbon emission trading system from the perspective of China’s carbon emission trading development，and attempts to construct the price mechanism of China’s carbon emission trading system based on the EU ETS pricing mechanism. In order to present the relevant research results，the book is divided into eight chapters.

Chapter One is the introduction. This chapter mainly focusing on the research’s background and significance，defines the relevant concepts，introduces the research methods and the research thinking.

Chapter Two is the theoretical basis and literature review. This chapter explains the external theories，the theory of pollution rights trading，Coase’s theory of property and other related classic theories related to the research in this book. On the basis of indicating the latest researches in this research field，this chapter summarizes the domestic and foreign research results.

Chapter Three is an overview of the EU ETS. This chapter first outlines the establishment background and development of the international carbon emissions trading system，and briefly introduces several important carbon emissions trading systems worldwide. Then，based on the description of the formation，development and constitute of the EU ETS，the author summarizes the core mechanisms of EU ETS，including total amount control and allocation mechanism，allowance supply and supplement mechanism，monitoring’ report and verification system，compliance and punishment mechanism. Finally，the author summarizes the demonstration role played by EU ETS.

Chapter Four is the analysis of EU carbon emission trading price mechanism and the influencing factors. At the beginning，this chapter introduces the price formation mechanism，price operation mechanism and price supervision mechanism in the price mechanism of EU ETS. Then this chapter shows the price fluctuations in the three development stages of EU ETS，and divides the emission price influencing factors into three aspects，including supply factors，demand factors and external factors，to conduct qualitative analysis. Then，based on the analysis on the interaction among the EU emission trading price influencing factors，the author clarifies how each sub-influencing factor affects the trend of carbon prices. Finally，after the empirical analysis on the EUA price influencing factors in the second stage and the third stage of EEX by using the model，the author finds out that the energy price has a significant and direct impact on the carbon price. In addition to the natural gas price in the third stage，the prices of other energy sources affect the EUA spot prices significantly in different stages. The macroeconomic environment has a limited impact on carbon prices，and it showes an insignificant relationship in the third period. Temperature variables have a significant impact on the carbon price. With the frequent occurrence of extreme weather，the negative correlation of temperature on the price of carbon emission rights in the future may be further deepened.

Chapter Five is the research on the price correlation mechanism of EU carbon emissions trading. On the basis of the inherent logic of the price correlation mechanism in the carbon trading market，this chapter builds a price correlation model to conduct an empirical analysis on the future and spot price relationship and interaction effects of the EUA，and the future and spot price relationship and interaction effects of CER in the second stage of EU ETS by using vector error correction model and vectorautoregression model respectively. It also conducts an empirical analysis on futures and spot price of EUA in the third stage of EU ETS，and make a research on the price correlation mechanism of EUA and CER in the second stage and EUA in the third stage by using impulse response function and variance decomposition and other quantitative analysis methods. According to the research，in the EUA and CER markets in the second stage of EU ETS，although futures have the basis for a certain price discovery function，the spot yield rate is still in a dominant position，and futures prices reflect market information more sensitively，which is suitable for the development of spot price. As for influencing factors of the futures and spot price of EUA in the third stage of EU ETS，the spot price has a certain guiding effect on the futures price，and the discovery function of the futures price needs to be further strengthened. Finally，it selects the data from the middle year of the third stage for extended research，and once again confirms that the research conclusions of this book is true validity.

Chapter Six is the development and overall design of China’s carbon emission trading system. Based on the full reference to the EU ETS，this chapter reviews the development of China’s carbon emission trading system from three aspects，including the historical process of fulfilling carbon emission reduction responsibilities，the construction process of China’s carbon emissions trading pilots，and the development process of the national carbon emissions trading markets，and further analyzes the constraints of the inadequacy of the constituent elements of the carbon emission trading system faced with the national unified carbon emission trading system，the long-term indepedent market made the operation of the unified more difficult，and the legislation and policy control of the national carbon emission trading market which urgently need to be improved，and finally completes the overall design plan of China’s carbon emissions trading system from four aspects：legislation as the first priority，focusing on planning and guidance，conducting top-level design，and strengthening supervision.

Chapter Seven is the construction of the price mechanism of China’s carbon emissions trading system. This chapter proposes specific arrangements for the construction of China’s carbon emission trading price mechanism. First，in terms of price forming mechanism，the initial quota in primary market should adopt mixed pattern combining free allocation with paid auction. The initial price of the carbon emission permit should be confirmed based on the shadow price. Referring to the derivative price forming mechanism，fixing the price for carbon future goods should fully simulate various pricing models，quantify the future goods price scientifically and assess the value of futures. After comprehensive consideration，the trading price of carbon futures could be settled down and reasonable upset price of carbon futures auction could also be determined. Second，in terms of the price operation mechanism，some mechanisms should be set up，including carbon quota adjustment mechanism and high-low price limit mechanism，trans-regional offset mechanism of carbon emission quota and carbon credits，flexible implement mechanism on the basis of interperiod repository mechanism and floating bilateral relief valve mechanism. Third，in terms of the price discovering mechanism，national carbon futures exchange should be established in Shanghai，and carbon futures contract of CEA and CCER should be designed according to the fixed paradigm of international future contract. In addition，China should positively introduce diversified transaction subjects，such as emission enterprises，speculators focusing on institutional speculation and futures broker companies，so as to vitalize the whole China’s trading market of carbon futures. In conclusion，this chapter makes an overall plan of the price mechanism of our national carbon emission permit.

Chapter Eight is the conclusion of the book and the research prospects for the future.