This paper theoretically and empirically revisits carbon pricing from the supply-side perspective for carbon assets to solve the recent low price issue which may delay the development of emission reduction technologies in the sense of marginal abatement costs. We propose a carbon pricing model linked to crude oil prices, which has historically been employed in supply-side driven pricing of long-term contracts for early-stage energy trading. Since the model is designed to hold carbon prices between certain lower and upper boundaries using S-shaped carbon price linkage to crude oil prices, it can be useful to overcome a recent low carbon price issue. In addition, it is shown that the model can alleviate the difficulties of carbon derivative pricing in selecting market price of risk. Empirical studies using EUA and Brent crude oil futures prices estimate the parameters of the Brent crude oil-linked EUA price model. The comparison of EUA prices simulated from the model with historical EUA prices suggests that simulated EUA prices be kept relatively higher than historical EUA prices. This is preferable for accelerating carbon emission reductions in that it can make emission reduction technologies with high marginal abatement costs affordable. It may imply that EUA must be priced using a crude oil-linked carbon price model in the early stage of EUA trading until EUA markets mature. This is a sharp contrast to current carbon markets employing premature market-based or supply and demand based pricing models. To show usefulness of crude oil-linked carbon pricing, we also give a numerical example of European carbon option pricing based on the Brent crude oil-linked EUA price model by using the Crank-Nicolson finite difference method. Finally we discuss the relation between crude oil-linked carbon pricing and emission reduction risk. These studies may suggest carbon policy makers should take account of crude oil-linked carbon pricing to tackle low price and low liquidity issues of carbon assets.

中文翻译：

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碳定价的供应方观点

本文从供应方的角度从理论上和经验上重新审视了碳资产的碳定价，以解决近期的低价问题，这可能会从边际减排成本的角度推迟减排技术的发展。我们提出了一种与原油价格相关的碳定价模型，该模型在历史上一直被用于早期能源交易的长期合同的供应方驱动定价中。由于该模型旨在通过使用S形碳价格与原油价格的联系来将碳价格保持在一定的上下限之间，因此克服近期的低碳价格问题可能很有用。此外，表明该模型可以减轻碳衍生产品定价在选择风险市场价格时的困难。使用EUA和布伦特原油期货价格的实证研究估计了与布伦特原油挂钩的EUA价格模型的参数。从模型模拟的EUA价格与历史EUA价格的比较表明，模拟EUA价格应保持相对高于历史EUA价格。这对于加速碳减排是优选的，因为它可以使具有高边际减排成本的减排技术负担得起。这可能意味着在EUA交易的早期阶段直到EUA市场成熟之前，必须使用原油挂钩的碳价格模型对EUA进行定价。这与当前采用过早的基于市场或基于供需的定价模型的碳市场形成鲜明对比。为了显示与原油挂钩的碳定价的有用性，我们还使用Crank-Nicolson有限差分法给出了基于布伦特原油挂钩的EUA价格模型的欧洲碳期权定价的数值示例。最后，我们讨论了与原油挂钩的碳定价与减排风险之间的关系。这些研究可能表明，碳政策制定者应考虑与原油挂钩的碳定价，以解决碳资产的低价格和低流动性问题。