Which emissions trading pilot is most relevant to others? Evidence from entropy-based correlations.

The full-fledging of Chinese national emissions trading system (ETS) still depends on the experiences of its pilot projects. This paper accesses the interdependence between ETSs from a complexity perspective in order to identify which one is with the most important relevance in terms of the entropy-based correlation. Firstly, the complexity of pilots is measured with multi-scale fuzzy entropy. Entropy-based correlations, the correlations of entropy series, are then used to describe dynamic behavior of the pilots. Finally, the role of pilots is studied by norms and eigenvalue variations. Multi-scale fuzzy entropy analysis finds that all pilots have small entropy values, thus indicating a low complexity. Entropy-based correlations show a dominant positive and centered correlations between the pilots. However, the correlations are strong (the absolute value > 0.5) within a week while weak (the absolute value < 0.5) for time scales larger than one month. Beijing pilot presents the greatest norm in general and has the biggest variations of the eigenvalues. It is thus regarded as the one that is most relevant to others among China's regional carbon markets. The research suggests that more importance should be paid to the core pilot when constructing the national carbon market. • Study complexity of carbon pilots from a multi-scale time dependent point of view. • Correlations of fuzzy entropy are used to describe dynamic behavior of carbon pilots. • China's carbon pilots present more complexity on time scale shorter than one month. • Entropy are strongly correlated at weekly scales but are weakly at monthly scales. • Beijing pilot is reorganized as the core of China's regional carbon markets. [ABSTRACT FROM AUTHOR]