Research on the Structural Mutation of Carbon Emission Allowance Trading Price of China

Abstract

This paper conducts theoretical and empirical research on the structural mutation of China’s carbon emission allowance trading price. Firstly, it analyzes the possibility of price mutation from the perspective of market mechanism through theoretical analysis. Secondly, the Bai-Perron Multiple Breakpoint Test method is used to test the autoregressive model of the carbon valence sequence. It is found that the carbon emission price series of each pilot have multiple structural mutations, and the breakpoints often occur around the annual compliance date. It is believed that the compliance requirement is the direct internal factor that causes the sudden change in the carbon emission price structure. Combined with the observation of market transaction characteristics and the direction of price sudden changes, the analysis of the deeper internal causes of price sudden changes in the market lies in the poor ability of enterprises to actively manage quotas, low market transaction activity, and excessive total supply of quotas. Based on the problems and reasons reflected by the empirical test results, this paper finally puts forward three rationalization suggestions for the improvement of the carbon emission allowance trading market.