Indirect double regulation and the carbon ETSs linking: The case of coal-fired generation in the EU and China

Zeng, Yuan

doi:10.1016/j.enpol.2017.09.038

Cited by 12 publications

(3 citation statements)

References 33 publications

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“…Though the dual-track strategy is advantageous at the national level, a single approach, cap-and-trade or carbon tax, should be adopted at the enterprise level to avoid redundant responsibilities (Zeng, 2017). In 2017, China established a national carbon trading market, which only explicitly included the power industry.…”

Section: Carbon Regulationsmentioning

confidence: 99%

Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry?

Yang

Sun

et al. 2020

Journal of Cleaner Production

114

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The debate between cap-and-trade and carbon tax, two major carbon emission reduction mechanisms to deal with global warming, has been going on for years unsettled. The strategy to implement one of them or both is by far mainly addressed at the national level, and there is a need to customize the policy-making for different sectors, especially the emerging remanufacturing industry that has the great potential to reduce material and energy consumptions. Based on a closed-loop supply chain model, this study analyzes the tradeoffs between carbon tax and cap-and-trade with a series of numerical studies. While keeping carbon emissions under control, cap-and-trade demonstrates a better fit to remanufacturing: its performances on manufacturer profit, social welfare, and consumer surplus surpass carbon tax' in nine, eight, and six out of nine groups respectively. Only when the carbon quota level is too high, the cap-and-trade is possible to lose. In addition, this study examines two government-to-enterprise-subsidy (G-toE -S) strategies, direct subsidy and policy bias, and find both helpful but almost no difference in their impacts. The findings yield useful insights into the industry-wise design of carbon emission reduction mechanisms for remanufacturing and similar sectors.

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Section: Carbon Regulationsmentioning

confidence: 99%

Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry?

Yang

Sun

et al. 2020

Journal of Cleaner Production

114

View full text Add to dashboard Cite

show abstract

“…Integrating both the EU and Chinese trading markets has been a particular interest to further analysis in current research (Heindl and Voigt 2012;Fragkos et al 2018). Its potential emerges with two factors, the lower abatement cost and the electricity sector (Zeng 2017). A relatively lower abatement cost attracts the EU to consider China as a potential market to offset their permits, while the electricity generation industry has been the largest source of CO 2 emission in both regions.…”

Section: Addressing Differences and Potential Markets Integrationmentioning

confidence: 99%

Potential integration of Chinese and European emissions trading market: welfare distribution analysis

Perdana

Vielle

2021

Mitig Adapt Strateg Glob Change

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Central to the aims of the Paris Agreement, an integrated carbon market could potentially be a practical bottom-up option for effective and efficient mitigation. This paper quantifies the welfare effects of integration of Emission Trading Scheme (ETS) between the European Union (EU) and China. Using the European version of the computable general equilibrium model GEMINI-E3, our assessment reveals that integrating trading markets benefits both regions through the decrease welfare costs from abatements. China’s welfare improves through net gain of selling the allowance, while the EU experiences lower deadweight loss. This effect is stronger to some notable countries in the EU, with high energy-intensive industries such as Poland and the Czech Republic. While a few others, such as Netherlands and Ireland, face higher welfare costs from negative trade gain. Limiting the trade quotas to 40% captures most of the EU welfare gain coming from CO2 trading. Further analysis at the sectoral level reveals that market integration significantly minimizes the loss of competitiveness of European energy-intensive industries and reduces international leakage. Our finding thus confirms the potential of the emissions trading market as an effective instrument to facilitate multilateral coordination in global mitigation.

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“…The EU coal future prices are relevant as coal is the primary energy source, particularly in Germany. Currently, coal is ranked second after oil as an energy source in the world [6]. The trading in future contracts started on 26 February 2008 for phase 2.…”

Section: Introductionmentioning

confidence: 99%

Moving Average Market Timing in European Energy Markets: Production Versus Emissions

et al. 2018

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This paper searches for stochastic trends and returns predictability in key energy asset markets in Europe over the last decade. The financial assets include Intercontinental Exchange Futures Europe (ICE-ECX) carbon emission allowances (the main driver of interest), European Energy Exchange (EEX) Coal ARA futures and ICE Brent oil futures (reflecting the two largest energy sources in Europe), Stoxx600 Europe Oil and Gas Index (the main energy stock index in Europe), EEX Power Futures (representing electricity), and Stoxx600 Europe Renewable Energy index (representing the sunrise energy industry). This paper finds that the Moving Average (MA) technique beats random timing for carbon emission allowances, coal, and renewable energy. In these asset markets, there seems to be significant returns predictability of stochastic trends in prices. The results are mixed for Brent oil, and there are no predictable trends for the Oil and Gas index. Stochastic trends are also missing in the electricity market as there is an ARFIMA-FIGARCH process in the day-ahead power prices. The empirical results are interesting for several reasons. We identified the data generating process in EU electricity prices as fractionally integrated (0.5), with a fractionally integrated Generalized AutoRegressive Conditional Heteroscedasticity (GARCH) process in the residual. This is a novel finding. The order of integration of order 0.5 implies that the process is not stationary but less non-stationary than the non-stationary I(1) process, and that the process has long memory. This is probably because electricity cannot be stored. Returns predictability with MA rules requires stochastic trends in price series, indicating that the asset prices should obey the I(1) process, that is, to facilitate long run returns predictability. However, all the other price series tested in the paper are I(1)-processes, so that their returns series are stationary. The empirical results are important because they give a simple answer to the following question: When are MA rules useful? The answer is that, if significant stochastic trends develop in prices, long run returns are predictable, and market timing performs better than does random timing.

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Indirect double regulation and the carbon ETSs linking: The case of coal-fired generation in the EU and China

Cited by 12 publications

References 33 publications

Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry?

Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry?

Potential integration of Chinese and European emissions trading market: welfare distribution analysis

Moving Average Market Timing in European Energy Markets: Production Versus Emissions

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