The Carbon Emission Reduction Effect of the Carbon Futures Market

Based on time series data of carbon emission intensity and carbon futures trading volume in Shanghai, this paper systematically analyzes the carbon emission reduction effect of the carbon futures market and its underlying mechanisms. The study finds that: First, through its price discovery mechanism, the carbon futures market strengthens carbon cost constraints by forming a forward carbon price that truly reflects the scarcity of carbon allowances, thereby compelling enterprises to incorporate carbon costs into their long-term planning. Second, as a risk management tool, carbon futures help hedge against price volatility through hedging and derivative portfolios, reducing the uncertainty of low-carbon transition and enhancing the stability of emission-reduction investments. Third, the market optimizes intertemporal resource allocation through a dynamic adjustment mechanism, allowing enterprises to flexibly borrow or lend allowances to balance short-term compliance pressure with long-term technological upgrading needs, thus accelerating the emission reduction process across industries. Fourth, relying on a capital allocation mechanism, carbon futures prices are linked with green financial products to establish a positive emission reductionpremiumreinvestment cycle, leveraging both public and private capital into low-carbon technologies and amplifying the scale effect of emission reductions. This paper provides theoretical support for developing market-based emission reduction instruments and improving the design of carbon financial derivatives, offering policy insights into balancing emission reduction rigidity and economic flexibility under the dual carbon goals.