Optimal design of carbon tax to stimulate CCS investment in China's coal‐fired power plants: A real options analysis

Zhang, Hongdou

doi:10.1002/ghg.1814

Cited by 11 publications

(3 citation statements)

References 31 publications

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“…The cost of abatement of CCU technology is expected to be 58–68 US $/tCO 2 [43,44]. Now, the Chinese government has officially initiated the construction of a national carbon market [45], and research on promoting the development of low-carbon technologies in the high-carbon sectors by imposing carbon taxes is also being carried out simultaneously [46]. From the experience of the European Union and other foreign countries, the lime industry, which is a major greenhouse gas emitter, will be strictly constrained by the carbon emission control policy [47].…”

Section: Discussionmentioning

confidence: 99%

Forecast and Analysis on Reducing China’s CO2 Emissions from Lime Industrial Process

Tong

Zhou

Guo

et al. 2019

IJERPH

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China greenhouse gas inventories show that CO2 emissions from the lime industrial process are large scales and closely related to the development of its downstream industries. Therefore, there is high importance to analyze and forecast on reducing China’s CO2 emissions from lime industrial process. The aims of this paper are to make up the research gaps in China and provide a quantitative reference for related authorities to formulate relevant policies. The prediction method in this paper is consistent with the published national inventory, which is an activity data based method to predict carbon dioxide emissions from the industrial process of four categories of lime products. Three future scenarios are assumed. The business as usual scenario (BAU) is a frozen scenario. There are two emission reduction scenarios (ERS and SRS) assumed under different emission reduction strength considering combined industrial process CO2 emission reduction approaches from both the production side and the consumption side. The results show that between 2020 and 2050, China’s lime industrial process has an increasingly significant CO2 emission reduction potential, enabling both emission intensity reductions and total emission reductions to be achieved simultaneously. Based on the simulation results from emission reduction scenarios, compared with 2012 level, in 2050, the emission intensity can be reduced by 13–27%, the total lime production can be reduced by 49–78%, and the CO2 emissions in the lime industrial process can be reduced by 57–85%.

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Section: Discussionmentioning

confidence: 99%

Forecast and Analysis on Reducing China’s CO2 Emissions from Lime Industrial Process

Tong

Zhou

Guo

et al. 2019

IJERPH

View full text Add to dashboard Cite

show abstract

“…From carbon taxes and other policy perspectives, Wang and Zhang 25 explored the optimal carbon tax policy based on the trinomial tree real‐option mode and considered the mechanism of combining carbon tax policy and carbon trading system. And Zhang et al 26 .…”

Section: Literature Reviewmentioning

confidence: 99%

The effects of policy subsidy on the investment decisions of carbon capture and storage—A real‐options approach

Zhang

Qing

2022

Greenhouse Gases

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Carbon capture and storage (CCS) plays an important role in promoting developing countries to reduce carbon emission and meet the requirement for carbon reduction under carbon neutral and carbon peak targets. To evaluate the incentive effect of subsidization mechanisms on CCS investment, the paper incorporates two incentives into the model, considers the effects of the carbon trading price, electricity price, and other uncertain factors on the investment behaviors for CCS projects under uncertainty and explores incentive intensity of two policies on investment based on the real option method. The results show that even in the case of full operating cost subsidies and double electricity price subsidies, the power plant still delays CCS investment due to the imperfection of carbon market. The most appropriate policies for supporting immediate investment in CCS project are identified in the paper by considering the critical carbon price and electricity price in different scenarios. Additionally, the findings show that it is more efficient for the electricity price subsidy than cost subsidy with same subsidy proportion under single policy condition, while the minimum subsidy amount required to invest immediately is 32.86 million CNY in the combination of the two policies. This provides environmental policymakers with valuable insights on promoting CCS deployment under the context of carbon reduction. © 2022 Society of Chemical Industry and John Wiley & Sons, Ltd.

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“…Chen, Wang, and Ye [28] studied the significance of a power generation subsidy in the investment decisions of CCS under the dual influence of the carbon trading market and subsidy policies, and found that the effects of a government subsidy on CCS investment and carbon reduction depends on market conditions. Wang and Zhang [29] pointed out that carbon tax is an important policy instrument to control greenhouse gases, and explored the decision behavior of a potential investor to design a suitable carbon tax rate from a microeconomic perspective. The results showed that the optimal carbon tax rate is sensitive to uncertainties, which includes carbon price volatility and initial carbon price.…”

Section: Literature Reviewmentioning

confidence: 99%

Investment Decisions of Fired Power Plants on Carbon Utilization under the Imperfect Carbon Emission Trading Schemes in China

Zhang

Liu

2019

Processes

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Carbon capture, utilization, and storage (CCUS) is one of the most effective technologies to reduce CO2 emissions and has attracted wide attention all over the world. This paper proposes a real option model to analyze the investment decisions of a coal-fired power plant on CCUS technologies under imperfect carbon emission trading schemes in China. Considering multiple uncertainties, which include carbon trading price volatility, carbon utilization revenue fluctuation, and changes in carbon transport and storage cost, the least squares Monte Carlo simulation method is used to solve the problems of path dependence. The research results show that the independent effects of carbon trading mechanisms on investment stimulation and emission reduction are limited. The utilization ratio of captured CO2 has significant impacts on the net present value and investment value of the CCUS project. Moreover, the investment threshold is highly sensitive to the utilization proportion of food grade CO2 with high purity. It is suggested that the Chinese government should take diverse measures simultaneously, including increasing grants for research and development of carbon utilization technologies, introducing policies to motivate investments in CCUS projects, and also improving the carbon emission trading scheme, to ensure the achievement of the carbon emission reduction target in China.

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Optimal design of carbon tax to stimulate CCS investment in China's coal‐fired power plants: A real options analysis

Cited by 11 publications

References 31 publications

Forecast and Analysis on Reducing China’s CO2 Emissions from Lime Industrial Process

Forecast and Analysis on Reducing China’s CO2 Emissions from Lime Industrial Process

The effects of policy subsidy on the investment decisions of carbon capture and storage—A real‐options approach

Investment Decisions of Fired Power Plants on Carbon Utilization under the Imperfect Carbon Emission Trading Schemes in China

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