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Exploring the Linkage Effects between Coking Coal Futures and Carbon Emission Rights Prices under the Dual-Carbon Framework

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Listed:
  • Shiguang Gu
  • Min Li
  • Sang Di

Abstract

Coking coal is a vital energy resource for economic development, with fluctuations in coking coal futures prices significantly guiding spot prices. Additionally, variations in carbon emission rights prices directly affect China's energy conservation and emission reduction efforts. This paper examines the daily trading prices of carbon emission rights and coking coal futures. It utilizes various tests, including the ADF test and cointegration test, and constructs a two-dimensional vector autoregression (VAR) model with a two-period lag. The paper also performs an impulse response function analysis and variance decomposition. Empirical results reveal- First, the daily trading prices of coking coal futures have exhibited a fluctuating upward trend over the past six years; Second, there is a long-term cointegration relationship between coking coal futures prices and carbon emission rights prices; Third, there is no Granger causality between the two; Fourth, fluctuations in carbon emission rights prices have a stronger guiding effect on coking coal futures prices than vice versa. Recommendations include- (1) Strengthening oversight of the coking coal futures market and leveraging policy guidance to prevent extreme prices; (2) Systematically including more participants in the carbon market, optimizing the trading structure, and promoting healthy market development; (3) When developing policies for carbon emission rights, the government should mitigate the impact of price fluctuations on other sectors.

Suggested Citation

  • Shiguang Gu & Min Li & Sang Di, 2024. "Exploring the Linkage Effects between Coking Coal Futures and Carbon Emission Rights Prices under the Dual-Carbon Framework," International Business Research, Canadian Center of Science and Education, vol. 17(4), pages 1-65, August.
    • Handle: RePEc:ibn:ibrjnl:v:17:y:2024:i:4:p:65
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    References listed on IDEAS

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    1. Ye Xue & Yiting Huang, 2017. "Study on the price co-movement among the Asia Pacific, European and Chinese coal markets – based on the empirical analysis of MS-VEC model," Applied Economics, Taylor & Francis Journals, vol. 49(7), pages 693-701, February.
    2. Jan Bentzen, 2007. "Does OPEC influence crude oil prices? Testing for co-movements and causality between regional crude oil prices," Applied Economics, Taylor & Francis Journals, vol. 39(11), pages 1375-1385.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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