Measuring Carbon Market Transaction Efficiency in the Power Industry: An Entropy-Weighted TOPSIS Approach

Abstract

Carbon emission control is an urgent environmental issue that governments are paying increasing attention to. Improving carbon market transaction efficiency in the context of China’s power industry is important for green growth, low carbon transmission, and the realization of sustainable development goals. We used the entropy-weighted Technique for Order Preference by Similarity to an Ideal Solution (TOPSIS) method in this empirical study to analyze the carbon market transaction efficiency of China’s power industry. The results showed that the Beijing carbon market has the highest transaction efficiency, followed by those of Guangdong Province and Shenzhen City. Hubei Province also has a relatively high carbon market transaction volume and turnover; its transaction efficiency ranks fourth. Shanghai, Tianjin, and Chongqing are the lowest-ranked regions, having carbon markets with relatively low trading volume and turnover. We, therefore, recommend that to develop a unified national carbon market, governmental agencies at all levels should equitably allocate carbon; strict regulations and penalties are also needed.