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Impacts of the coming emission trading scheme on China’s coal-to-materials industry in 2020

Guangyao Li, Jin Yang, Dingjiang Chen and Shanying Hu

Applied Energy, 2017, vol. 195, issue C, 837-849

Abstract: China will establish a national emission trading scheme (ETS) in 2017, and the excessive development of coal-to-materials may hinder China′s emission reduction goals, specifically to reduce carbon emissions intensity by 40–45% from 2005 to 2020. In this study, the status of China′s coal-to-materials projects is presented, based on which we forecasted the high, middle and low CO2 emission scenarios for the coal-to-materials industry in 2020, which were determined to be approximately 580, 290, and 180Mt CO2, respectively. The high scenario is approximately equivalent to the total emission from Canada, the world's 11th-largest emitter in 2014. The main purpose of this study is to research the impacts of ETS on the coal-to-materials industry in 2020. Oil-to-materials is an ineluctable and powerful competitor to the coal-to-materials industry, complicating this matter. Therefore, the Cournot model was applied to quantitatively analyze the competition between these two monopolistic entities and determine the influence of oil, coal and carbon prices on CO2 emissions from coal-to-materials. The visual simulation of the results shows that ETS can improve the competitiveness of oil-to-materials, resulting in a decline in production of coal-to-materials. However, the effect of the carbon cost with historical price range of Chinese ETS pilots on mitigating CO2 emissions from the coal-to-materials industry is limited. High oil prices and low coal prices can increase the emissions from coal-to-materials significantly. Our study also provides a tool to analyze the feasibility of ETSs for a set emission reduction goal. Additionally, the necessary sensitivity analysis was also provided.

Keywords: CO2 emission; Coal-to-materials; Emission trading scheme; China (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:appene:v:195:y:2017:i:c:p:837-849