A cooperative game analysis for the allocation of carbon emissions reduction responsibility in China's power industry

Quande Qin, Yuan Liu and Jia-Ping Huang

Energy Economics, 2020, vol. 92, issue C

Abstract: The allocation of carbon emissions reduction responsibility (CERR) is a fundamental step to carbon emissions trading (CET) market. In China's power industry, regions with divergent power generation efficiencies and energy structures are connected by a nationwide power grid, causing shifts in carbon emissions. We construct a graph restricted cooperative game model for the allocation of CERRs among regions by proposing a novel characteristic function to describe possible minimal carbon emissions in which power generation is prioritized by efficiency. We employ the Myerson value as the solution of the game to capture the structure of the power grid and the power transmission. Our results indicate the following: (1) Power producing regions with high ratio of clean energy such as “Southwest” and “Sichuan and Chongqing” obtain negative shares of CERR. This provides an incentive for them to contribute to carbon emissions reduction. (2) Large power consumers such as “East” and “Bohai Rim” should take larger CERRs because they transfer carbon emissions to the power producing regions. (3) The role of a region in the power transmission network is an important factor in allocating CERR. This study provides insightful policy implications for the construction of a CET market in China's power industry.

Keywords: Allocation of carbon emissions reduction responsibility; Power industry; Cooperative game; Myerson value (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988320303005
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:eneeco:v:92:y:2020:i:c:s0140988320303005

DOI: 10.1016/j.eneco.2020.104960

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().