The Analysis of the EU-ETS Carbon Allowance Cap Setting Method

Ye, Bin1; Miao, Lixin1; Jiang, Jingjing2; Yang, Peng1

2015

2352-5398

PROCEEDINGS OF THE 2015 INTERNATIONAL CONFERENCE ON MANAGEMENT SCIENCE AND INNOVATIVE EDUCATION (MSIE 2015)

32

386-389

29 AVENUE LAVMIERE, PARIS, 75019, FRANCE

ATLANTIS PRESS

One of the most important works of establishing a carbon trading market is to set the allowance cap. For a long time, no matter in Europe or China, most of experts and professionals have believed the cap of allowance to be fixed. The reason seemed clear enough: Fixed cap can guarantee stable anticipated supply in carbon market, which is the basis of market equilibrium, the necessary condition for enterprises to make consistent decisions, and is beneficial for building up allowance pricing mechanism based on marginal carbon emission reduction cost; therefore it can ensure the effectiveness of carbon market. However, this theoretical assumption deviates from practical result, leading to an antinomy. The theoretical assumption is that fixed cap as the basis of the orderliness of carbon market. The fact is that EU-ETS, as a carbon market strictly implementing cap of allowance, not only has violent price fluctuations, but also needs to adjust its cap periodically, which results in another round of disorderly violent fluctuation of allowance price. This paper endeavors to find out the reasons for the paradox by analyzing the theoretical logic of EU-ETS adopting fixed cap.

EU-ETS carbon market cap setting

其他

英语

ISSHP

Education & Educational Research ; Business & Economics

Education & Educational Research ; Management

WOS:000373122800085

Web of Science

1.Tsinghua Univ, Grad Sch Shenzhen, Shenzhen Logist Engn & Simulat Lab, Shenzhen 518055, Peoples R China
2.South Univ Sci & Technol China, Shenzhen 518055, Peoples R China

Ye, Bin,Miao, Lixin,Jiang, Jingjing,et al. The Analysis of the EU-ETS Carbon Allowance Cap Setting Method[C]. 29 AVENUE LAVMIERE, PARIS, 75019, FRANCE:ATLANTIS PRESS,2015:386-389.