Power System Risk Assessment in China Considering Carbon Emission Trading

Carbon finance is a branch of modern financial technology, which aims promoting energy conservation, serving the development of modern real economy better. The centerpiece of modern financial management and development is risk assessment, the identification of risks in carbon financial market and prevention techniques are the core technologies of carbon finance management and development. Therefore, the study of "risks and their prevention of carbon financial market" has its theoretical importance. Carbon finance is the way to solve the problems of real economy with financial techniques. As a financial behavior relying on carbon emissions trading, carbon finance is an innovation within the category of financial management and it has a close relationship with identification, analysis and price control of risks. Thus, to gain a well-developed carbon financial market, clarifying the risk is the first step. Then on the basis of risk pricing model, we can design different products and derivatives with different risk characteristics by the method of reserve modeling. Thus the risk of trading could be more controllable and the variety of transaction could be more abundant. This thesis analyses the trading patterns of carbon finance, its trading tools and derivative products starting with the principles of economics. Then a comparison of the development of carbon finance around the globe is made and with the experience of other countries a policy proposal is put forward. Meanwhile, to better support this research, model measurements based on VaR and CVaR is made and with data from operating market some suggestion is made.