Research on Shadow Price in the Valuation of Carbon Emission Rights_Vol. 2 No. 3 (JMSD 2025)_Journal of Management and Social Development (ISSN: 3005-5741)

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Research on Shadow Price in the Valuation of Carbon Emission Rights

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DOI: https://doi.org/10.62517/jmsd.202512303

Author(s)

Dongchen Li

Affiliation(s)

School of International Education, Beijing Institute of Technology, Beijing, China

Abstract

Carbon emissions trading, a key component of green finance, serves as an important economic tool to achieve the "dual carbon" goals. Establishing a scientific and efficient carbon trading mechanism and fostering the sustainable development of the carbon market have become focal points in the industry, with carbon emission rights valuation being a fundamental task. This paper explores the application of the shadow price model in valuing carbon emission rights, using Beijing's carbon market as a case study. By analyzing data from 2000 to 2023, it assesses the option characteristics and marginal abatement costs of carbon emission rights. The study first highlights the significance of carbon trading and China's challenges in meeting its "dual carbon" targets. It then examines China's carbon market, particularly Beijing's, and employs principal component analysis and regression modeling to estimate the shadow price based on output value per unit of carbon emissions. The findings suggest that when the shadow price is lower than the market price, it may incentivize emission reductions and improve resource allocation efficiency, as demonstrated by Beijing's carbon trading data.

Keywords

Carbon Credits; Valuation; Shadow Price Modeling

References

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