Market-based solution in China to finance the clean from the dirty
Financial incentives play a key role in promoting renewable energy investments that can help China achieve the ‘dual carbon’ goal. The national emissions trading scheme (ETS) and the renewable energy portfolio standard (RPS) are two existing market-based policy instruments that can generate stable e...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
KeAi Communications Co. Ltd.
2024-03-01
|
| Series: | Fundamental Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2667325822001820 |
| _version_ | 1797248301381189632 |
|---|---|
| author | Haoqi Qian Rong Ma Libo Wu |
| author_facet | Haoqi Qian Rong Ma Libo Wu |
| author_sort | Haoqi Qian |
| collection | DOAJ |
| description | Financial incentives play a key role in promoting renewable energy investments that can help China achieve the ‘dual carbon’ goal. The national emissions trading scheme (ETS) and the renewable energy portfolio standard (RPS) are two existing market-based policy instruments that can generate stable expected returns for low-carbon projects. This paper studies the interactive distribution effects of these two market-based instruments. We use the micro-level thermal power plant data to investigate the abatement effects of the national ETS, in which the details show that the existing rate-based ETS will result in higher negative impacts on power units, whose installed capacities are smaller than 400 MW. The interactive distribution effects between the two markets will occur when the permit allocation standards of the national ETS become stricter than the existing ones. Provinces in Eastern China and Northern China will face high pressure on costs in both ETS and RPS markets. When the levels of the permit allocation standards are set as 70% of the existing ones and the carbon price is assumed to be 200 yuan/ton in 2030, the annual market size of the national ETS will be nearly 100 billion yuan, and the annual market size is predicted to be 250 billion yuan. In the existing rate-based national ETS, the China Certified Emission Reduction (CCER) mechanism will have an offsetting effect, which should be taken into serious consideration during the policy-making processes in the future. |
| first_indexed | 2024-04-24T20:12:25Z |
| format | Article |
| id | doaj.art-cae7fecef2f9484aab6571b9d82573ca |
| institution | Directory Open Access Journal |
| issn | 2667-3258 |
| language | English |
| last_indexed | 2024-04-24T20:12:25Z |
| publishDate | 2024-03-01 |
| publisher | KeAi Communications Co. Ltd. |
| record_format | Article |
| series | Fundamental Research |
| spelling | doaj.art-cae7fecef2f9484aab6571b9d82573ca2024-03-23T06:26:34ZengKeAi Communications Co. Ltd.Fundamental Research2667-32582024-03-0142324333Market-based solution in China to finance the clean from the dirtyHaoqi Qian0Rong Ma1Libo Wu2Institute for Global Public Policy, Fudan University, Shanghai 200433, China; LSE-Fudan Research Centre for Global Public Policy, Fudan University, Shanghai 200433, ChinaSchool of Economics, Fudan University, Shanghai 200433, ChinaSchool of Economics, Fudan University, Shanghai 200433, China; Shanghai Institute for Energy and Carbon Neutrality Strategy, Fudan University, Shanghai 200433, China; Corresponding author.Financial incentives play a key role in promoting renewable energy investments that can help China achieve the ‘dual carbon’ goal. The national emissions trading scheme (ETS) and the renewable energy portfolio standard (RPS) are two existing market-based policy instruments that can generate stable expected returns for low-carbon projects. This paper studies the interactive distribution effects of these two market-based instruments. We use the micro-level thermal power plant data to investigate the abatement effects of the national ETS, in which the details show that the existing rate-based ETS will result in higher negative impacts on power units, whose installed capacities are smaller than 400 MW. The interactive distribution effects between the two markets will occur when the permit allocation standards of the national ETS become stricter than the existing ones. Provinces in Eastern China and Northern China will face high pressure on costs in both ETS and RPS markets. When the levels of the permit allocation standards are set as 70% of the existing ones and the carbon price is assumed to be 200 yuan/ton in 2030, the annual market size of the national ETS will be nearly 100 billion yuan, and the annual market size is predicted to be 250 billion yuan. In the existing rate-based national ETS, the China Certified Emission Reduction (CCER) mechanism will have an offsetting effect, which should be taken into serious consideration during the policy-making processes in the future.http://www.sciencedirect.com/science/article/pii/S2667325822001820H70Q28Q48 |
| spellingShingle | Haoqi Qian Rong Ma Libo Wu Market-based solution in China to finance the clean from the dirty Fundamental Research H70 Q28 Q48 |
| title | Market-based solution in China to finance the clean from the dirty |
| title_full | Market-based solution in China to finance the clean from the dirty |
| title_fullStr | Market-based solution in China to finance the clean from the dirty |
| title_full_unstemmed | Market-based solution in China to finance the clean from the dirty |
| title_short | Market-based solution in China to finance the clean from the dirty |
| title_sort | market based solution in china to finance the clean from the dirty |
| topic | H70 Q28 Q48 |
| url | http://www.sciencedirect.com/science/article/pii/S2667325822001820 |
| work_keys_str_mv | AT haoqiqian marketbasedsolutioninchinatofinancethecleanfromthedirty AT rongma marketbasedsolutioninchinatofinancethecleanfromthedirty AT libowu marketbasedsolutioninchinatofinancethecleanfromthedirty |