Research progress in theory of carbon economics and its evolution law in the context of dual carbon

The study of carbon economics theory and its evolutionary laws in the context of carbon peaking and carbon neutrality is crucial for advancing global carbon emission reduction efforts and understanding the interaction between carbon markets and complex socioeconomic systems. Carbon markets play a significant role in reducing greenhouse gas emissions through the implementation of a theoretical carbon trading mechanism. This paper proposes a theoretical framework based on the concepts of “externality” and public goods theory, focusing on Pigouvian tax, Coase theorem, and the distribution of carbon emission rights through quotas. It also explores the underlying economic principle of the “green premium”. Carbon financing is expected to support future advancements in carbon-neutral technologies. Therefore, this paper summarizes the theory and examines the relationship between carbon trading and carbon finance markets. The mechanism of the carbon market operates based on supply and demand dynamics, and now the market is witnessing gradual expansion in which other evolutionary laws also play parts, such as carbon price fluctuations,improvements to the regulatory system, and the diversification of market participants. The main instruments in the carbon market include carbon taxes, trading, and offsets, with governments, businesses, and individuals playing different roles. This paper provides a systematic analysis of theoretical innovations and practical achievements in carbon market economics, serving as a valuable reference for strategic decision-making and technological innovation in the pursuit of carbon peaking and neutrality goals.