Price Jumps of China’s Carbon Market: The View from Market Transactions and Policy Releases

ABSTRACT

As the principal emitter of carbon dioxide, China institutes dual carbon goals and fosters carbon pilot markets. This paper explores the mechanism of carbon’s price jump, both considering the deployments of policy instruments and inherent financial characteristics unique to each pilot market within China. The results indicate that market transaction information exerts the most profound influence on instances of price jumps, whereas the implementation of uniform national policies also yields a noteworthy effect. However, the impact of pilot-specific policies varies across different regions and highlights its heterogeneity. Consequently, these findings could provide sound evidence to facilitate the involvement of traders and furnish decision-making departments to produce more accurate and efficient policies.

KEYWORDS:

• China’s carbon market
• price jumps
• market transaction

JEL:

• G180
• G100
• D400

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [71901158], the China Postdoctoral Science Foundation [2020T130454, 2018M643512], the Sichuan Philosophy and Social Science Foundation Project [SCJJ23ND169], the National Social Science Cultivation Project of Sichuan University [2023skzx-pt185, 2023ZY-SX007], the Ministry of Education industry-university cooperative project [202101198003, 202002294020], and the Talent introduction Project in Xihua University [RX2200002007].