The impact of China's entry into the carbon trading market on European carbon prices

Author:

Wang Xiaoya

Abstract

As the world's largest greenhouse gas emission country, the success or failure of the Chinese national carbon emissions trading market will largely determine climate change’s further development. Chinese national carbon market, which was opened on July 16, 2021, will also exert spillover effects on carbon trading markets in other countries, including the European carbon emissions trading market, which will have a more significant impact. This paper uses the double difference model(DID), sets the price of European certification emission reduction(CER) as the dependent variable, and takes China's entering into the carbon emissions trading market and the RMB exchange rate as the independent variable to test the influences of China's entering in the carbon emissions trading market on the European CER price. After that, non-linear machine learning models such as support vector machines are used to fit and predict the price of European CER, which further verifies that the opening of the Chinese national carbon emissions trading market contributes to a decline in European CER price.

Publisher

Boya Century Publishing

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