Impact of carbon allowance allocation on power industry in China’s carbon trading market: Computable general equilibrium based analysis
Yakun Li and
Zhijie Jia ()
Applied Energy, 2018, vol. 229, issue C, 814-827
Global warming has necessitated the quest for CO2 mitigation globally. Emission Trading Scheme (ETS) is a market-oriented strategy which may be effective for CO2 mitigation. This study establishes a Computable General Equilibrium (CGE) model to analyze the impact of different ETS quota allocation scheme on the electricity industry and determine the best choice of quota allocation scheme for the electricity industry in China. The research on China's carbon trading market may provide an important case for the global carbon trading market. The results show that different quota allocation schemes have impacts on electricity price, and there are some spillover effects to other industries. Higher Annual Decline Factor (ADF) will reduce carbon rights than lower ones. Changes in the quota allocation schemes of a single industry (electricity) can hardly affect aggregate GDP and CO2 emissions. Moreover, ETS quota allocation scheme in the electricity sector based on historical emission intensity could have better performance in commodity price, electricity supply, ETS price, GDP and social welfare. Thus, this paper suggests that the best choice of ETS quota allocation scheme in the electricity sector is the scheme that is based on historical emission intensity which ADF is 0.
Keywords: Emission Trading Scheme (ETS); Carbon dioxide (CO2) emission; Allowance allocation mechanism; Electricity industry; Computable General Equilibrium (CGE) (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:229:y:2018:i:c:p:814-827
Ordering information: This journal article can be ordered from
http://www.elsevier. ... 405891/bibliographic
Access Statistics for this article
Applied Energy is currently edited by J. Yan
More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().