China Policy Journal Volume 1, Number 1, Fall 2018 | Page 40

Assessing the Implementation of Local Emission Trading Schemes in China
Brent t
are collected from 2013 Week 25
when the first piloting ETS started to
operate in Shenzhen. Available observations
of LNG t
only started from 1 st
January 2014. Data are all collected till
30 th June 2017. The currency unit is all
converted to US dollar ($) using OECD
currency conversion rates.
Further, we include the Shanghai
Shenzhen 300 stock index data (31 st
December 2014=1000, daily) to capture
the relation between the macroeconomic
level and the CEA price. The data
was collected from CEIC database for
the time period of 2013 Week 25–2017
Week 26 and converted to weekly data
(Stock t
, weekly) by averaging the daily
stock index data. The macroeconomic
level can affect the demand and supply
of CEA through affecting the production
activities and the associated CO 2
emissions. Thus, we expect that CEA
prices increase when Stock t
increases.
We also add three dummy variables
to test the structural changes of
the regressions. They are Break2014,
Break2015, and Break2016, respectively
taking a value of 1 from 2014 Week 27,
2015 Week 27 and 2016 Week 27. So
there are four sub-periods of the dataset,
launching dates -June 2014 (1 st Period),
July 2014–June 2015 (2 nd Period),
July 2015–June 2016 (3 rd Period), and
July 2016–June 2017 (4 th Period). The
compliances of regulated enterprises in
any local ETS follow a particular calendar.
At the beginning of year T in each
ETS pilot, the regulated enterprises receive
their CEA allocations for year T.
The regulated enterprises have to submit
their emission reports to the regulator in
March of year T or the end of February
of year T, with dates varying over pilots,
and then a third party will verify their
reports. In April, the regulated enterprises
should submit the verified emission
Table 3. Test for Structural Breaks of lnPrice t
ETS
Full Sample Period
From
Launching
Date
To
AR
Lags
37
Break2014 Break2015 Break2016
(2014 Week
26)
(2015 Week 26)
(2016 Week
26)
Chi Statistic Chi Statistic Chi Statistic
BJ 28-Nov-2013 30-Jun-2017 3 4.275 16.827*** 19.453***
CQ 19-Jun-2014 30-Jun-2017 2 — 2.577 2.920
SH 26-Nov-2013 30-Jun-2017 2 2.237 10.251** 8.198**
SZ 18-Jun-2013 30-Jun-2017 3 41.766*** 18.991*** 5.935
TJ 26-Dec-2013 30-Jun-2017 2 9.561** 2.541 24.578***
GD 16-Dec-2013 30-Jun-2017 3 9.699** 11.305** 3.419
HB 02-Apr-2014 30-Jun-2017 1 0.021 5.311* 5.175*
Note: lnPrice t
refers to the logarithmic form of CEA price. ***, ** and * denote significance at 1%, 5% and
10% levels. “BJ” is short for Beijing ETS, “CQ” for Chongqing ETS, “GD” for Guangdong ETS, “HB” for
Hubei ETS, “SH” for Shanghai ETS, “SZ” for Shenzhen ETS, and “TJ” for Tianjin ETS. “—” denotes the
statistics are not available due to the characteristics of the original data.