Analysis and Assessment of the Value of Carbon Assets Based on Monte-Carlo Simulation

Author(s): 
H. R. Cui, F. X. Liu, & E. Armentani

Affiliation(s): 
School of Economics and Management, North China Electric Power University, Baoding 071003, China, ‡School of Engineering, University of St. Thomas, St. Paul, MN, 55105-1079, USA

Cite this paper
H. R. Cui, F. X. Liu*, & E. Armentani‡, “Analysis and Assessment of the Value of Carbon Assets Based on Monte-Carlo Simulation”, Journal of Mechanical Engineering Research and Developments, vol. 39, no. 2, pp. 555-564, 2016. DOI: 10.7508/jmerd.2016.02.035

ABSTRACT: From the macro point of view, at this stage it mainly includes carbon assets of CDM emission reduction and carbon assets of quotas in developing countries. At present, China is the largest side of CDM carbon reduction supply. How to assess the value of CDM assets carbon related our investment decisions and value maximization of the project. CDM carbon emission reduction benefits is independent from the main revenue of the project, its value greatly influenced by the price of carbon emissions. Therefore, it is necessary to study a reasonable carbon price forecasting method. According to the characteristics of CDM carbon assets, the use of Monte Carlo simulation method to predict the price of carbon, and thus establish a carbon assets valuation model, is expected to more truly reflect the value of the CDM carbon emissions reduction assets. This is conducive to enterprise participate in CDM projects to price carbon emissions and it is in favor of domestic mandatory quotas trading companies to determine the value of quota carbon assets. It is conducive to enhance the Chinese voice in the international pricing of carbon trading, maximize the value of CDM carbon assets and promote the development of emission reduction in China.

Keywords : pCER; carbon assessment; Monte-Carlo simulation.

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