Correlation and Dynamic Volatility Spillover between Green Investing Market, Coal Market, and CO2 Emissions: Evidence from Shenzhen Carbon Market in China

With the continuous expansion scale of carbon market and the development of carbon trading mechanism, carbon emission right, as a new financial asset, is being brought into the category of asset allocation by more and more investors. As the burning of coal is the major source of carbon dioxide, China is facing serious ecological and environmental problems, which restrict the development of low-carbon economy. In order to reach the carbon dioxide emission reduction targets and promote the development of green investment market, the carbon market should be a good emission reduction measure. The correlation and dynamic volatility spillover among coal, carbon, and green investing markets are becoming a hot topic for current research. The paper applies both VAR-GARCH-DCC and VAR-GARCH-BEKK models to draw some significant conclusions. (1) The green investment market, coal market, and Shenzhen carbon market show obvious time-varying correlation, and the volatility of the green investment market is higher. (2) There is a bidirectional Granger causality between green investing and coal markets. (3) The investment portfolio and hedging mechanism of the market are established to reduce the risk and help investors obtain higher returns.

Dynamic Spillovers and Asymmetric Spillover Effect between the Carbon Emission Trading Market, Fossil Energy Market, and New Energy Stock Market in China

In 2020, China proposed the goal of achieving carbon emission peaks by 2030 and carbon neutrality by 2060. For China, whose energy consumption structure has long been dominated by fossil energy, carbon trading and new energy are crucial for the realization of the emission target. By establishing a connectedness network model, this paper studies the static and dynamic spillovers between the Hubei carbon trading market, new energy stock market, crude oil market, coal market, and natural gas market in China, and draws the following conclusions: (1) the static spillover index of the carbon–energy–stock system is 3.57% and the dynamic spillover index fluctuates between 7.67% and 22.62%, indicating that the spillover effect of the system is low; (2) for the whole system, whether from a static or dynamic perspective, the carbon market always plays the role of net information receiver, while new energy is the net information transmitter; (3) the new energy stock market and the coal market always act as net information transmitters to the carbon market; and (4) the spillover effect of the system is asymmetric, wherein the system is more sensitive to negative information about price returns, and this asymmetry is much greater when the system is active.

Situation on the Global Coal Market during the Recovery of the World Economy after the COVID-19 Crisis

The global economic recovery in 2021 will lead to a recovery in coal demand after a significant drop in 2020 caused by the Covid-19 crisis. There is no indication that the global coal consumption will decline significantly in the coming years, as increased demand in some Asian countries will offset declines in others. Based on the assumption of a global economic recovery, experts forecast a 2.6% growth in the global coal demand in 2021, driven by an increased demand for electricity and industrial production. The economies of China, India and Southeast Asia account for most of the growth. The future of coal will largely be decided in Asia. Today, China and India account for 65% of the world's coal demand. Taking into account Japan, Korea, Taiwan and Southeast Asia, this share rises to 75%. China will be particularly influential, as it currently accounts for half of the world's coal consumption. By 2025, the European Union and the United States will account for less than 10% of global coal demand, down from 37% in 2000.

The effect of international energy market shocks on coal price of China based on the fuzzy integrated vector auto regressive and error correction model

From the perspective of external market shocks, this paper proposed fuzzy integrated vector auto regression (FVAR) model that determines the long-term basis and short-term basis interactions of China’s coal price with international energy prices. The proposed FVAR preform coal price fluctuation based on long-term and short term span in six stages including unit root testing, Johansen cointegration test, vector auto regression (VAR) model construction, fuzzification of VAR model, vector error correction (VEC) model and an impulse response function(IRF). It is observed that there is a steady long-term stability and equilibrium bond between the China’s domestic coal price, international coal price and the international crude (unrefined) oil price. The international coal and international crude oil price have an opposite effect on China’s domestic coal price. In addition, the former has a stronger fuzzy price discovery function on China’s domestic coal market than the latter. In the short term, China’s domestic coal price is more complex to instability reactions and is affected by market expectations. The international energy market is more effective than domestic coal market, and there is a relatively stable price adjustment mechanism between the two, with the international coal price playing a leading role in the fuzzy guidance of China’s coal price. Therefore, in reference to international energy pricing models, the paper proposes a fuzzy pricing model for a coal futures index based on the coal futures trading price and supplemented by the premium and discount agreed to by both trading parties.

ANALYSIS OF KEY TRENDS OF THE INTERNATIONAL COAL MARKET (ON THE EXAMPLE OF THE COUNTRIES OF NORTH-EASTERN ASIA)

The article provides an analysis of key trends in the international market, using the example of the countries of Northeast Asia. In 2019, the world coal market amounted to 1,424.5 million tons, of which 78.1% are energy grades to produce electricity and heat, and 21.9% are in metallurgy, the reserves of which are significantly less. The import coal market of the countries of Northeast Asia in 2019 was already 680 million tons, covering 48% of the entire world coal market. The paper provides an overview of the key importers and exporters of coal in the world, the quantitative and qualitative characteristics of the supplied raw materials, and analyzes the key factors affecting the pricing of coal. In the conclusions, the main trends in the international coal market of the countries of Northeast Asia are presented, including "geographical" — the shift of the center of world trade from Europe to Asia, and "types and quality of imported coal" — an increase in the share of high-quality premium energy and coking (metallurgical). Trends can be clearly seen in the countries of Northeast Asia, which actively use coal, and are making efforts to decarbonize their national economies, while intensifying inter-fuel competition with other primary energy sources.