Research on Trading Risk Prevention of National Carbon Market (Power Generation Sector)

Required by the central government, power generation sector took the lead in participating in the national carbon market. However, as the trading volume of carbon emission permit increases significantly, the risks of carbon trading also increase. Therefore, to address the issues on carbon trading risks, CEC carried out the research on trading risk prevention in national carbon trading (power generation sector). Through in-depth probing into the carbon trading risks as well as prevention and control measures together with different parties, such as government authorities, registration, clearing and trading institutions, emission control enterprises, financial regulatory institutions, and third-party institutions, the research summarized the experience and lessons learned on power trading risk prevention and management. In line with the requirements of management of different entities in national carbon market, the following suggestions were proposed, providing decision making tools and technical support for constructing national carbon market risk management mechanism:

▪ establishing and improving laws and regulations;

▪ carrying out operation testing for carbon market;

▪ improving market supervision mechanism;

▪ establishing a market price protection mechanism;

▪ establishing mechanism for information disclosure;

▪ strictly implementing punishment for market violations;

▪ studying and introducing guidelines for risk prevention.