Examining the linkage between economic policy uncertainty, coal price, and carbon pricing in China: Evidence from pilot carbon markets

Jiqiang Wang, Peng-Fei Dai, Xihui Haviour Chen, Duc Khuong Nguyen

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Economic policies affect companies’ production decisions. And the energy consumption volume is an intuitive reflection of the enterprise’s production decisions. In China, coal is the main source of carbon emissions and the most important energy source. Therefore, the coal market and the uncertainty of economic policies are both directly tied to the carbon market. This study explores both the direct impact of economic policy uncertainty and coal price on carbon prices as well as the indirect impact of economic policy uncertainty on carbon prices through coal prices by utilizing the DCC-GARCH model and the NARDL model. The findings indicate that the dynamic correlations between coal prices and the CEPU are always negative and that those between the price of carbon and the CEPU vary by area. Meanwhile, the dynamic correlations between coal and carbon prices are only positive in Shenzhen and Beijing. Both coal prices and economic policy uncertainty produce asymmetrical impacts on carbon prices. Some policy implications are provided for developing the carbon markets in light of the results drawn from the study.
Original languageEnglish
Article number120003
JournalJournal of Environmental Management
Volume352
Early online date13 Jan 2024
DOIs
Publication statusPublished - Feb 2024

Keywords

  • Asymmetric effects
  • Carbon prices
  • Chinese economic policy uncertainty
  • COVID-19
  • Steam coal prices

ASJC Scopus subject areas

  • Waste Management and Disposal
  • Management, Monitoring, Policy and Law
  • Environmental Engineering

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