Carbon emissions trading scheme exploration in China: A multi-agent-based model

Ling Tang, Jiaqian Wu, Lean Yu () and Qin Bao

Energy Policy, 2015, vol. 81, issue C, 152-169

Abstract: To develop a low-carbon economy, China launched seven pilot programs for carbon emissions trading (CET) in 2011 and plans to establish a nationwide CET mechanism in 2015. This paper formulated a multi-agent-based model to investigate the impacts of different CET designs in order to find the most appropriate one for China. The proposed bottom-up model includes all main economic agents in a general equilibrium framework. The simulation results indicate that (1) CET would effectively reduce carbon emissions, with a certain negative impact on the economy, (2) as for allowance allocation, the grandfathering rule is relatively moderate, while the benchmarking rule is more aggressive, (3) as for the carbon price, when the price level in the secondary CET market is regulated to be around RMB 40 per metric ton, a satisfactory emission mitigation effect can be obtained, (4) the penalty rate is suggested to be carefully designed to balance the economy development and mitigation effect, and (5) subsidy policy for energy technology improvement can effectively reduce carbon emissions without an additional negative impact on the economy. The results also indicate that the proposed novel model is a promising tool for CET policy making and analyses.

Keywords: Carbon emissions trading (CET); Multi-agent-based model; Emissions reduction; Energy policy simulation (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (86)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:81:y:2015:i:c:p:152-169

DOI: 10.1016/j.enpol.2015.02.032

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