The Influencing Factors of sCER Price Dynamics Under the Clean Development Mechanism: Theory and Econometric Analysis
- 29 Downloads
In order to explore the factors and their complex mechanism affecting the price dynamics under the clean development mechanism (CDM), this article employs the secondary Certified Emission Reduction (sCER) carbon price as the study object, and analyzes its influencing factors from aspects of the international carbon-reduction policies, macroeconomic fluctuations, energy and similar carbon products prices. The innovation of this paper lies in: Introducing necessary factor (the developing countries pricing power) and the application of several international representative indicators to underline the “world” nature of CDM; utilizing different econometric models to obtain noteworthy and more robust results. The authors test the theoretical findings with multiple stationary time series from the launch of CDM to present (2008–2016). The results reveal that sCER price fluctuation shows the characteristic of asymmetry and substantial persistence. There is a strong statistically significant relationship between macroeconomic conditions, coal and oil prices, with the price of sCER. The authors discover that the pricing power of developing countries indeed has a clear but small impact on the sCER price changes, whereas the price elasticity of supply under CDM is so weak. The interaction between EU emission allowances (EUAs) and sCER presents a shift from dependency to substitution.
KeywordsClean development mechanism econometric analysis influencing factors sCER carbon price
Unable to display preview. Download preview PDF.
The authors are grateful to the Editor as well as two anonymous referees whose insightful suggestions and comments greatly improved the quality of this paper. We also thank the National Natural Science Foundation of China under Grant  for supporting this research work. The usual disclaimer applies.
- IPCC, Climate change 2013: The physical science basis, In Contribution of working group I to the fifth assessment report of the intergovernmental panel on climate change, Cambridge University Press, Cambridge, 2013.Google Scholar
- World Bank 2012, State and Trends of the Carbon Market 2012, World Bank Report, Washington, D.C.Google Scholar
- World Bank 2009, State and Trends of the Carbon Market 2009, World Bank Report, Washington, D.C.Google Scholar
- Xu L and Chen Y, Global climate governance and China’s strategic choice, World Economics & Politics, 2013, 1: 116–159 (in Chinese).Google Scholar
- Zhang C, Ding Y, and Wang W J, An innovation of estimating value at risk of international carbon market: Conditional autoregressive value at risk models with refinements from extreme value theory, Chinese Journal of Management Science, 2015, 23(11): 12–20 (in Chinese).Google Scholar
- Koch N, Fuss S, Grosjean G, et al., Causes of the EU ETS price drop: Recession, CDM, renewable policies or a bit of everything? — New evidence, Energy Policy, 2014, 73(13): 676–685.Google Scholar
- Koch N, Dynamic linkages among carbon, energy and financial markets: A smooth transition approach, Applied Economics, 2014, 46(46): 715–729.Google Scholar
- Zhang Y J and Wei Y M, Interpreting the complex impact of fossil fuel markets on the EU ETS futures markets: An empirical evidence, Management Review, 2010, 22(6): 34–41 (in Chinese).Google Scholar
- Hammoudeh S, Nguyen D K, and Sousa R M, What explain the short-term dynamics of the prices of CO2, emissions? Energy Economics, 2014, 46(C): 122–135.Google Scholar
- Chevallier J, EUAs and CERs: Vector autoregression, impulse response function and cointegration analysis, Economics Bulletin, 2010, 30(1): 558–576.Google Scholar
- Zou Y and Wei W, The study on the impact factors of certified carbon emissions (CERs) spot markets, Journal of Financial Research, 2013, (10): 142–153 (in Chinese).Google Scholar
- Huang S S and Zhang J, Study on influencing factors of China’s carbon emission rights price, Advanced Materials Research, 2014, 962–965: 1468–1471.Google Scholar
- Zhang C, Yang Y, and Zhang T, The integrated measurement about carbon finance market risk of commercial banks based on copula model, Chinese Journal of Management Science, 2015, 23(4): 61–69 (in Chinese).Google Scholar
- Gao X, The impacts on UN climate change frameworks from other multilateral mechanisms, World Economics & Politics, 2012, (4): 59–71 (in Chinese).Google Scholar
- IPCC, Climate change 2014: Mitigation of climate change, Cambridge University Press, Cambridge, on line at: https://doi.org/www.ipcc.ch/report/ar5/wg3.