In other words, the core of carbon trading is to "cost" the environment, transform the environment into paid production factors with the help of market forces, and trade carbon emission rights as valuable assets in the market.
As for the operation mechanism of the carbon market, firstly, the government determines the overall emission reduction target and adopts the quota system. First, the initial carbon emission rights are allocated to enterprises included in the trading system in the primary market, and enterprises can freely trade these carbon emission rights in the secondary market.
Secondly, enterprises with relatively low emission reduction costs and economic incentives will take the lead in reducing emissions and sell excess carbon emission rights to enterprises with relatively high emission reduction costs to obtain additional benefits. Enterprises with high emission reduction costs reduce the cost of carbon emission standards by purchasing carbon emission rights.
According to the analysis of Warburg Securities, the price of carbon emission rights in the effective carbon market is the marginal emission reduction cost of enterprises. In the micro-decision-making of enterprises, it is mainly to compare the cost of carbon emission reduction, excess carbon emissions and the cost of purchasing carbon quotas with the benefits brought by excess emission production, and make corresponding decisions.