Dynamic evolution of electricity price transmission effects from electricity-carbon market coupling under tradable green certificate price regulation

Ziyu Yang, Chengjiang Li, Honglei Wang and Jing Yang

Energy, 2025, vol. 334, issue C

Abstract: The Carbon Emission Trading (CET) and Tradable Green Certificate (TGC) markets drive power sector decarbonization through price and market mechanisms. However, structural barriers in price transmission and mismatches in policy coordination across the electricity, CET, and TGC markets have reduced overall mitigation effectiveness. This study establishes a TGC price-mediated carbon cost pass-through rate regulatory effect model. A system dynamics model is also developed to simulate the integrated Electricity–carbon–Green Certificate markets. The results indicate that only 5.4 % of carbon costs from fossil fuel generation are currently passed through to electricity prices, and TGC prices have not yet shown a statistically significant moderating effect. In addition, under the current policy and market mechanism, the carbon price follows a three-phase trajectory— “rapid rise high-level stabilization–gradual convergence to equilibrium”. Electricity prices, under government regulation, stay within the 0.38–0.46 yuan/kWh range and exhibit a co-movement trend with carbon prices. A coordinated policy package that integrates dynamic carbon quota constraints (0.8 %–1 % annual reduction), gradual Renewable Portfolio Standard (RPS) intensity increases (8 % annually), and optimized carbon cost pass-through mechanisms (7 %) enables the establishment of a coupled equilibrium between stable electricity-carbon market evolution and deep decarbonization.

Keywords: Power sector; Tradable green certificates; Carbon cost pass-through rate; Moderating effect regression; System dynamics (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544225035030
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:energy:v:334:y:2025:i:c:s0360544225035030

DOI: 10.1016/j.energy.2025.137861

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

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