The market-linkage of the volatility spillover between traditional energy price and carbon price on the realization of carbon value of emission reduction behavior

Establishing a carbon market is widely regarded as an effective means of controlling global carbon emission. Purchasing carbon emission right will increase the cost of enterprises, especially for high-energy consumption industry. The volatility of carbon market will undoubtedly affect the behavior of these enterprises. It has been well recognized that there is significant interaction between the carbon market and the fossil energy (crude oil, natural gas and coal) market. This paper employs recurrence plot (RP) method and recurrence quantification analysis (RQA) method to investigate the volatility spillover between the three different energy futures markets and carbon emission market. The result shows that the volatility spillover between the coal market and carbon emission market is strongest. Based on this, in order to avoid the risk from the carbon emission market, industries should switch from coal to natural gas or oil, and this behavior will lead to the reduction of carbon emission. Industries will change their energy consumption structure to a much cleaner one which will reduce air pollutant and the emission of carbon dioxide on the realization of carbon value. (C) 2019 Elsevier Ltd. All rights reserved.