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Article

Price Dynamics and Interactions between the Chinese and European Carbon Emission Trading Markets

by
Qiyun Cheng
1,†,
Huiting Qiao
1,†,
Yimiao Gu
2,† and
Zhenxi Chen
3,*,†
1
Energy Development Research Institute, China Southern Power Grid, Guangzhou 510623, China
2
Department of Electronic Business, South China University of Technology, Guangzhou 510640, China
3
School of Economics and Finance, South China University of Technology, Guangzhou 510640, China
*
Author to whom correspondence should be addressed.
†
These authors contributed equally to this work.
Energies 2023, 16(4), 1624; https://doi.org/10.3390/en16041624
Submission received: 16 January 2023 / Revised: 27 January 2023 / Accepted: 2 February 2023 / Published: 6 February 2023
(This article belongs to the Special Issue Editorial Board Members’ Collection Series: Economic Growth, Energy Consumption and Carbon Emission)
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Abstract

The European carbon emission trading market is the largest and most mature market, while China’s carbon market has a short history. Institutionally, cross-market transaction is infeasible between the two markets. This paper investigates the long-run trend between the two markets as well as the price dynamics. Results show that a long-run trend exists between the Chinese and European carbon markets. Both markets possess self-correction capability in reducing price deviations, signaling a certain level of market efficiency. However, both markets also exhibit pricing inefficiency as historical price movements are able to impact prices. The European market informationally leads the Chinese market. Policy implications are that China should further upgrade its information disclosure system, such as unifying information disclosure standards across industries, and further develop its carbon derivatives markets to improve market transparency and market competition.
Keywords: carbon market; long-run trend; price dynamics; European ETS; Chinese ETS carbon market; long-run trend; price dynamics; European ETS; Chinese ETS

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MDPI and ACS Style

Cheng, Q.; Qiao, H.; Gu, Y.; Chen, Z. Price Dynamics and Interactions between the Chinese and European Carbon Emission Trading Markets. Energies 2023, 16, 1624. https://doi.org/10.3390/en16041624

AMA Style

Cheng Q, Qiao H, Gu Y, Chen Z. Price Dynamics and Interactions between the Chinese and European Carbon Emission Trading Markets. Energies. 2023; 16(4):1624. https://doi.org/10.3390/en16041624

Chicago/Turabian Style

Cheng, Qiyun, Huiting Qiao, Yimiao Gu, and Zhenxi Chen. 2023. "Price Dynamics and Interactions between the Chinese and European Carbon Emission Trading Markets" Energies 16, no. 4: 1624. https://doi.org/10.3390/en16041624

APA Style

Cheng, Q., Qiao, H., Gu, Y., & Chen, Z. (2023). Price Dynamics and Interactions between the Chinese and European Carbon Emission Trading Markets. Energies, 16(4), 1624. https://doi.org/10.3390/en16041624

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