Green finance policy coupling effect of fossil energy use rights trading and renewable energy certificates trading on low carbon economy: Taking China as an example

Yuling Pan and Feng Dong

Economic Analysis and Policy, 2023, vol. 77, issue C, 658-679

Abstract: In the context of low carbon economy development, controlling fossil energy consumption and promoting development in renewable energy are important paths for energy transition in various countries. Taking China as an example, this paper investigates the green finance policy coupling effect of fossil energy use rights trading (FET), renewable energy certificates trading (RECT), and renewable energy subsidies (RES) on the low carbon economy using a dynamic recursive computable general equilibrium (CGE) model. The main findings of this paper are as follows. (1) When using a game equity fixed-cost allocation model (Game-EFCAM) to allocate fossil energy use rights quotas among sectors, allocations differ in only a few sectors compared to the base period, and most sectors have relatively stable allocations compared to the base period. (2) The implementation of FET and RECT has a negative impact on per capita GDP. In the short term, RES can mitigate the negative impact of FET and RECT on per capita GDP, but eventually, the government needs to guide the enterprise innovation to improve the industrial structure to realize the double benefits of green finance policy. (3) The implementation of FET and RECT limits fossil energy consumption and also reduces the production possibility frontier of the secondary industries with higher levels of fossil energy consumption. The implementation of FET and RECT increases the proportions of tertiary industry and renewable energy. (4) The implementation of FET and RECT reduces carbon emissions. In other words, the implementation of FET and RECT mitigates the negative environmental externality. RES can enhance the carbon reduction efforts of FET and RECT. This research not only provides policy analysis for the development of the low carbon economy in China, but also gives a reference for other developing countries’ low carbon economy transition.

Keywords: Low carbon economy; Green finance policy; Renewable energy subsidy; Computable general equilibrium; Game equity fixed-cost allocation (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592622002223
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:77:y:2023:i:c:p:658-679

DOI: 10.1016/j.eap.2022.12.014

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().