The Long-Term Trend Analysis and Scenario Simulation of the Carbon Price Based on the Energy-Economic Regulation

• Published in: International journal of climate change strategies and management 2020-12, Vol.12 (5), p.653-668
• Main Authors: Li, Zhao-Peng, Yang, Li, Li, Si-Rui, Yuan, Xiaoling
• Format: Article
• Language: English
• Subjects: Alternative energy sources; Arid regions; Arid zones; Back propagation networks; Carbon; Clean energy; Clean technology; Climate change; Crude oil prices; Data mining; Econometrics; Economic development; Economics; Emissions; Emissions control; Emissions trading; Energy; Energy consumption; Futures; Impact analysis; Neural networks; Semi arid areas; Semiarid lands; Semiarid zones; Simulation; Solar energy; Stochastic models; Time series; Trend analysis; Trends; Variables
• ISSN: 1756-8692; 1756-8706
• DOI: 10.1108/IJCCSM-02-2020-0020

Purpose China’s national carbon market will be officially launched in 2020, when it will become the world’s largest carbon market. However, China’s carbon market is faced with various major challenges. One of the most important challenges is its impact on the social and economic development of arid and semi-arid regions. By simulating the carbon price trends under different economic development and energy consumption levels, this study aims to help the government can plan ahead to formulate various countermeasures to promote the integration of arid and semi-arid regions into the national carbon market. Design/methodology/approach To achieve this goal, this paper builds a back propagation neural network model, takes the third phase of the European Union Emissions Trading System (EU ETS) as the research object and uses the mean impact value method to screen out the important driving variables of European Union Allowance (EUA) price, including economic development (Stoxx600, Stoxx50, FTSE, CAC40 and DAX), black energy (coal and Brent), clean energy (gas, PV Crystalox Solar and Nordex) and carbon price alternatives Certification Emission Reduction (CER). Finally, this paper sets up six scenarios by combining the above variables to simulate the impact of different economic development and energy consumption levels on carbon price trends. Findings Under the control of the unchanged CER price level, economic development, black energy and clean energy development will all have a certain impact on the EUA price trends. When economic development, black energy consumption and clean energy development are on the rise, the EUA price level will increase. When the three types of variables show a downward trend, except for the sluggish development of clean energy, which will cause the EUA price to rise sharply, the EUA price trend will also decline accordingly in the remaining scenarios. Originality/value On the one hand, this paper incorporates driving factors of carbon price into the construction of carbon price prediction system, which not only has higher prediction accuracy but also can simulate the long-term price trend. On the other hand, this paper uses scenario simulation to show the size, direction and duration of the impact of economic development, black energy consumption and clean energy development on carbon prices in a more intuitive way.