Response of Chinese Carbon Markets to Green and Low Carbon Development Policies
Description
The responses of carbon prices to emission reduction policies can imply the market incentive effect of certain policies and effectiveness of carbon markets. The paper collects 51 policy events related to green and low-carbon development implemented by the Chinese government from December 2013 to December 2023. Applying the event study method, it discusses the short-term reaction of carbon prices in regional carbon markets to individual events, classified events and events as a whole. In addition, 5 diplomatic statements of Chinese government in multilateral climate governance process are selected, and a panel regression model is constructed to analyze the long-term reaction of carbon prices to each statement. The results are as follows. First, statements of Chinese government in climate diplomacy have long-term incentive effect on carbon markets. Second, China's green and low-carbon development policies has brought significant market incentives overall. Among the national, regional and industrial policies, the national and industrial policies have the most significant positive influence on carbon prices in the short term. Third, Hubei, Fujian and Shenzhen carbon markets are more effective.