How will a nationwide carbon market affect regional economies and efficiency of CO2 emission reduction in China?

Fan, Ying; Wu, Jie; Xia, Yan; Liu, Jingyu

doi:10.1016/j.chieco.2015.12.011

Cited by 108 publications

(39 citation statements)

References 21 publications

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“…The numerical result of regional disparity seems quite small, as the emissions reduction target-0.99%-is not very large in this study. The results are more significant in another study of us that the regional disparity will decrease with a larger emissions reduction target (2-10%) under the ETS policy [37]. Although the numerical result is small in this study, it does show the change in regional disparity that it increases when an RES policy is adopted.…”

Section: Social Costmentioning

confidence: 53%

“…The quantitative analysis is based on the CEEP Multi-Regional Energy-Environment-Economy Modelling System (CE 3 MS) that was mainly used in climate mitigation and impact analysis [35][36][37]. The CE 3 MS classifies 30 regions in mainland China (excluding Tibet due to a lack of data) and 17 industrial classifications in each region, including one agricultural, five energy, seven non-energy, and four service sectors (shown in Table 1).…”

Section: Methodsmentioning

confidence: 99%

“…The marginal abatement cost curves used in this analysis are estimated by applying a unified carbon tax in CE 3 MS. The detailed results are provided by Fan et al [37]. Eight sectors-five energy (Coal, Coil, Petro, Ele, Gas) and three energy-intensive (Chem, Nmm, Metal)-are considered as emissions traders.…”

Section: Modelling Approach For Etsmentioning

confidence: 99%

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How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?

Fan

Xia

2017

Energies

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Abstract:The adoption of emissions trading scheme (ETS) and renewable energy sources (RES) policies have been essential to achieving China's national targets for reducing CO 2 emissions and developing non-fossil energy sources. The combination of ETS and RES policies raises an important issue: What is the effect of combining ETS and RES policies on the existing carbon market and economy? Focusing on the design of the nationwide carbon market, this paper uses a multi-regional computable general equilibrium (CGE) model to analyze the economic impacts of ETS policy when combined with RES policies in China. The results show that China's annual ETS emissions cap should decrease by 0.3% to maintain stable CO 2 prices and achieve the targets in China's intended nationally determined contribution (INDC). It is estimated that the CO 2 price on the nationwide carbon market would decrease by 11-64% when the renewable energy subsidy rate increases from 20 to 100%, and the total trading volume would decrease by 3-25%. The results also show that the combination of an ETS and a feed-in tariff (FIT) results in greater GDP cost and welfare loss in all Chinese regions, increasing the total social cost by 0.01-0.06%.

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Section: Social Costmentioning

confidence: 53%

Section: Methodsmentioning

confidence: 99%

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How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?

Fan

Xia

2017

Energies

Self Cite

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“…Once fully established, the national ETS will have the potential to become a key feature of China's climate governance, and the primary policy instrument of its emission reduction goals (Jotzo et al, ; L. Liu, Chen, et al, ). Furthermore, if it is properly designed and implemented, it could be the most cost‐effective policy option, according to the results of modeling studies conducted by many researchers (Cui, Fan, Zhu, & Bi, ; Fan, Wu, Xia, & Liu, ; Hübler, Voigt, & Löschel, ; Mu, Evans, Wang, & Cai, ; K. Wang, Wei, & Huang, ). Yet, on the other hand, the success of an ETS program requires the appropriate institutional context at both macro‐ and microlevels.…”

Section: Evolution Of China's Ets From Pilots To National Programmentioning

confidence: 99%

Key challenges for China's carbon emissions trading program

Wang

Liu

Tan

et al. 2019

WIREs Climate Change

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China's national carbon emissions trading program is expected to become the world's largest carbon market and is critical for achieving China's domestic mitigation goals. But China's trading program is likely to face significant challenges, due to its large scale and high complexity. First, the accuracy and credibility of China's emissions data have been widely criticized. There are significant inconsistencies between the national and provincial emissions inventories, and the facility‐level data are even less satisfying. Institutional capacities related to the carbon market need to be significantly enhanced to strengthen monitoring, reporting, and verifying capabilities. Second, compared to emissions trading programs in other parts of the world, China's program is likely to face greater market volatility, due to the country's economic structural transition from a manufacturing‐based to a service‐based economy. Wise cap‐setting and allowance allocation methods and proper price containment mechanisms are needed to maintain market stability. And third, China is a market economy with many features of a central planning system, particularly in the energy sector. Large state‐owned enterprises (SOEs) do not act as profit‐maximizing entities, and their behaviors could undermine the efficiency of the cap‐and‐trade program. To address these challenges, we provide a series of policy recommendations, including capacity building from central to local levels, wise selection of allowance allocation methods to cope with changing economic realities, and deepening market‐oriented reforms in energy sectors and SOEs. This article is categorized under: The Carbon Economy and Climate Mitigation > Policies, Instruments, Lifestyles, Behavior

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“…With respect to China's existing pilot ETSs, their allowance mechanism is compared with schemes in EU and California [11], historical data on the price and trading volume is applied to assess the financial performance of the Shenzhen carbon market [12] and the distinct features of the Hubei ETS are summarized in [13]. As regards China's future national ETS, a multi-regional computable general equilibrium (CGE) model is adopted to examine the effects of a nationwide carbon market on CO 2 reduction efficiency under different emission reduction targets [14] and an online questionnaire has been conducted to identify the factors affecting companies' awareness and perception of the ETS [15], however quantitative analysis is still inadequate in this area. Considering the development of China's ETS and electricity markets, this paper develops several power dispatching and allowance allocation scenarios that are likely to happen in the future.…”

Section: Introductionmentioning

confidence: 99%

Aggregated impact of allowance allocation and power dispatching on emission reduction

Jiang

Xue

Huang

et al. 2017

J. Mod. Power Syst. Clean Energy

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Climate change has become one of the most important issues for the sustainable development of social well-being. China has made great efforts in reducing CO 2 emissions and promoting clean energy. Pilot Emission Trading Systems (ETSs) have been launched in two provinces and five cities in China, and a national level ETS will be implemented in the third quarter of 2017, with preparations for China's national ETS now well under way. In the meantime, a new round of China's electric power system reform has entered the implementation stage. Policy variables from both electricity and emission markets will impose potential risks on the operation of generation companies (GenCos). Under this situation, by selecting key variables in each domain, this paper analyzes the combined effects of different allowance allocation methods and power dispatching models on power system emission. Key parameters are set based on a provincial power system in China, and the case studies are conducted based on dynamic simulation platform for macro-energy systems (DSMES) software developed by the authors. The selected power dispatching models include planned dispatch, energy saving power generation dispatch and economic dispatch. The selected initial allowance allocation methods in the emission market include the grandfathering method based on historical emissions and the benchmarking method based on actual output. Based on the simulation results and discussions, several policy implications are highlighted to help to design an effective emission market in China.

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How will a nationwide carbon market affect regional economies and efficiency of CO2 emission reduction in China?

Cited by 108 publications

References 21 publications

How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?

How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?

Key challenges for China's carbon emissions trading program

Aggregated impact of allowance allocation and power dispatching on emission reduction

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