China-style "Acid Rain Plan"—A Pricing Formula for Carbon Option

In this paper, the pricing method of carbon emission right is improved, and the Chinese “acid rain plan” is put forward: the option mechanism is introduced into the initial distribution of carbon emission right, so that the purchaser sees the purchasing behavior as the right, effectively avoid the rejection mentality of the emission enterprise to the paid distribution carbon right, while avoid the risk of the price fluctuation of the carbon emission right. The specific method of operation is based on the existing price data, using the solution method of the second order parabolic variable coefficient differential equation Carbon emissions to pricing, for the introduction of Chinese-style "acid rain" to provide a theoretical basis. In this paper, the solution of the partial differential equation of the variable coefficient is approximated by the superposition of the solution of the ordinary differential equation of the variable coefficient by the small parameter method of the singular perturbation theory. It is easy to obtain the approximate analytical solution of the variable coefficient partial differential equation by the extension method.