The impact of Renewable Portfolio Standards on carbon emission trading under the background of China’s electricity marketization reform

Zhou Ying and Zhao Xin-gang

Energy, 2021, vol. 226, issue C

Abstract: Carbon emission trading (CET) is an important mechanism for China to achieve carbon emission reduction targets and sustainable development. The success of its implementation depends on the scientific institutional supply design. At present, China is actively promoting the implementation of electricity marketization reform and Renewable Portfolio Standards (RPS), which would change the institutional environment for manufacturers’ decision-making and trading, thus impacting CET. Accordingly, this paper aims to establish an evaluation model using the system dynamics method to simulate and evaluate the impact of RPS on CET under the background of electricity marketization reform by designing and combining different policy scenarios. The results show that: (1) The impact of electricity marketization reform and RPS on carbon trading is mainly reflected in carbon emission rights’ demand, trading volume, trading price and power generation of manufacturers. (2) Under the situation of marketed electricity price and the absence of RPS, various indicators of the CET market are superior to other policy combinations. (3) Marketed electricity price can effectively stimulate manufacturers’ demand for carbon emission rights, increase trading volume, and have a positive impact on CET. However, the implementation of RPS weakens the demand for emission rights, reduces manufacturers’ power generation and profit, and harms CET.

Keywords: Carbon emission trading; Electricity marketization reform; Renewable Portfolio Standards; System dynamics (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:226:y:2021:i:c:s0360544221005715

DOI: 10.1016/j.energy.2021.120322

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