The impacts of emission trading scheme on China’s thermal power industry: A pre-evaluation from the micro level

Bingxin Zeng, Jun Xie, Xiaobing Zhang, Yang Yu and Lei Zhu

Energy & Environment, 2020, vol. 31, issue 6, 1007-1030

Abstract: Emission trading scheme is known as a cost-effective measure for mitigating CO 2 emissions, and recently, China has started the world's largest carbon trading system. As the most influential industry in determining China's overall CO 2 emission level, the thermal power industry will be greatly affected by nationwide carbon market in the near future. This paper explores the impact of the upcoming national emission trading scheme on China's thermal power industry at firm level. First, based on empirical data of 478 thermal power plants, an empirical analytical framework of micro-firm level is constructed. Then, two kinds of policy scenarios, including no carbon emission trading and national emission trading scheme, in two different market structures have been analyzed. The results show that emission trading scheme have positive impacts on reduction of CO 2 emissions among China’s power plants and can reduce the total abatement costs by 0.37%–41.5%. Furthermore, most of the thermal power plants are emissions permits buyers including all the low-emission gas-fired power plants. Additionally, compared with the perfect competition market, more than 70% of thermal power plants increase their total abatement costs in imperfect competition market. These findings provide reference for promoting the development of nationwide carbon emission trading system in China.

Keywords: Emission trading scheme; thermal power plant; cost-saving effects; market power; China (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:engenv:v:31:y:2020:i:6:p:1007-1030

DOI: 10.1177/0958305X19882388

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