Abstract:

With the launch of China’s national carbon market at the end of 2017, 21 carbon emission trading systems have been put into operation worldwide. With the extensive development of carbon emission trading and the impact of the uncertainty of the product market, the default behavior of emission control firms is also increasingly diversified and complicated. Based on this, according to the prevailing business rules in the pilot areas of China’s carbon markets, this paper analyzes the ways of default behavior of the firms and the influence of supervision intensity on a carbon trading system with a savings mechanism and uncertain demand by introducing stochastic shocks into the product market. When the audit probability is high, the subjects will not generate systematic motivation to default on emissions, and obvious default on report under weak supervision settings will lead to an increase in total emissions. Faced with the impact of uncertainty, the savings mechanism can still promote the pollution sources of controlled emissions enterprises to distribute production in a relatively effective way. Therefore, this study gives the following suggestions: penalties for default should be graded, and penalties for reporting default should be greater than penalties for emission default; in order to improve the actual compliance rate, all localities should increase the proportion of spot checks on emission reports; the quota savings mechanism should be improved.

Key words: Carbon emission trading, Default behavior, Supervision, Experimental study