• Energy Research

Given the important role of the carbon market in fighting against global warming, the impact of information on the efficiency of the scheme is a critical issue for both its designers and the central authority. At least two aspects of information are worthy of attention. First is the incompleteness of information, with which the firms make decisions to minimize their abatement cost and maximize their profit. Second is the mechanism of information transmission. Based on an agent-based framework we established in our previous work, we explicitly depicted the first aspect and analysed its impact on firms’ decision-making and consequent market results. In this paper, we focus on the second aspect, transmission mechanism of information, which is depicted as an observation network among firms. The basis in reality is that the firms in the carbon market are usually from different industries or areas, and it is relatively easier to observe the conditions of firms from the same industry or area, corresponding to neighbours in the network. Four scenarios are considered, including no network, regular network, random network, and small-world network. We find that the existence of an observation network has a significant influence on the market results.

Abstract Regulators need to pay attention to the negative effects of the transaction costs when they define the reasonable coverage of the emissions trading scheme (ETS). In addition, the market structure in the ETS also needs to be considered in the market efficiency evaluation, as most covered firms come from industries with high market concentration. This paper incorporates transaction costs (monitoring, reporting and verification (MRV) costs and trading costs) and market structure into a partial equilibrium model to study their effect on the reasonable coverage of the ETS. A database of the 1867 industrial firms included in the ETS pilots in China is established for the case study. It is found that the MRV costs become the main factor of the breakdown in efficiency of the ETS. However, there seems to be no inherent relationship between the market structure and the efficient coverage of the allowance market. The policy implications derived from the case study can provide useful references for the upcoming national ETS in China.

Abstract This paper estimated the cost curve of energy saving and CO2 emissions reduction in China’s iron and steel sector. Forty-one energy saving technologies which are widely used or popularized are selected, their investments, operation costs, energy savings and CO2 abatement are collected and the data in 2010 are taken as a baseline. Then energy conservation supply curve and CO2 conservation supply curve under two different discount rates are calculated in the paper. These 41 technologies result in a saving contribution of 4.63 GJ/t and a CO2 abatement contribution of 443.21 kg/t. Cost-effectiveness of technologies was analyzed based on the fuel price and an estimated CO2 price. When comparing the result with the promoted technologies during the 12th five-year-plan, we found that some promoted technologies are not cost-effective in current situation. Three scenarios are set through changing the diffusion rate of technologies and the share of BOF and EAF, based on this energy saving potentials of technologies in 2020 and 2030 are forecasted. At the same time, we compared the change of the CSC depending on the year and the energy saving potentials in three scenarios of 2020 and 2030, respectively.

Abstract Solar photovoltaic (PV) technology is widely regarded as a significant and sustainable renewable energy option to fight against climate change.Accordingly, it is important to explore the potential of greenhouse gases (GHGs) mitigation and temperature benefits by substituting PV-generated power for coal-fired electricity. This necessity becomes particularly clear given that China hascommitted itself to a carbon emissions peak around 2030. Based on an integrated energy-economy-environmental model and a simple climate response model, we reach the following conclusions: (1) By restraining the cumulative GHGs emissions space within 255 GtCO 2eq till 2050, PV solar promises to dominate GHGs mitigation, with the highest contribution reaching 64.67%. (2) Under the moderate emissions-control case, China will achieve its emissions peak target, with solar energy substitution relieving the nation׳s dependence on coal. (3) The highest radiative forcing and temperature benefits yieldedthrough replacing coal-generated power with solar power is around 20% and 11.05%, respectively. (4) Finally, it is not too costly to gain such benefits: at most, the accumulated economic cost would be 102.14 trillion Yuanuntil 2050, accounting for less than 3% of the accumulated GDP.

Relying on real options theory, we employ a multistage decision model to analyze the effect of delaying the introduction of emission trading systems (ETS) on power plant investments in carbon capture and storage (CCS) retrofits, on plant operation, and on carbon dioxide (CO2) abatement. Unlike previous studies, we assume that the investment decision is made before the ETS is in place, and we allow CCS operating flexibility for new power plant investments. Thus, the plant may be run in CCS-off mode if carbon prices are low. We employ Monte Carlo simulation methods to account for uncertainties in the prices of CO2 certificates, other inputs, and output prices, relying on a realistic parameterization for a supercritical pulverized coal plant in China. We find that CCS operating flexibility lowers the critical carbon price needed to support CCS investment because it renders CCS investment less irreversible. For a low carbon price path, operating flexibility also implies that delaying the introduction of an ETS hardly affects plant CO2 abatement since the plant operator is better off purchasing emission certificates rather than operating the plant in CCS mode. Interestingly, for low carbon prices we find a U-shaped relation between the length of the delay and the economic value of the plant. Thus, delaying the introduction of an ETS may make investors worse off.

Abstract The high cost of carbon capture has hindered the deployment of carbon capture utilization and storage (CCUS) technology. Due to a dearth of associated engineering practices and business activities, there are currently no broadly viable business models for the large-scale deployment of CCUS technology. Evaluations at the business model level are essential to consider external factors, particularly for projects with a long industry chain and complex relationships among stakeholders, such as CCUS projects. This paper fills a gap in CCUS research by introducing four business models based on the different stakeholders involved in CCUS projects and their varying degrees of integration. Using Monte Carlo simulation, the distributions of return for each stakeholder under the four business models were obtained. The results show that the vertical integration model is the most appropriate choice for CCUS deployment in China during the early demonstration stages due to its lower interest rates and transaction costs. Based on the current cost level of CCUS, subsidy for storage is recommended in the early stage, and reasonable and stable carbon pricing policies (e.g., carbon tax) are conductive to large-scale deployment of CCUS in the long term.

This paper estimates the macroeconomic costs of CO2 emission reduction in China employing the input-output analysis with the multi-objective programming approach. The results show that the effect of reducing CO2 emissions on China’s economy is significant. Under the present conditions, the estimated macroeconomic costs of CO2 emission reduction in 2010 for China are approximately 3, 100–4, 024 RMB t - 1 . The stronger the abatement actions, the higher the macroeconomic costs of per unit emission reduction would be. Excavation industry, oil industry, chemical industry, and metal smelting industry have high potential to abate their CO2 emissions. Fan, Y., X. Zhang, and L. Zhu, 2010: Estimating the macroeconomic costs of CO2 emission reduction in China based on multi-objective programming. Adv. Clim. Change Res., 1, doi: 10.3724/SP.J.1248.2010.00027.

Abstract Carbon Capture and Storage (CCS) has been viewed as an emission abatement option with great potential in China as coal has dominated China's energy consumption. China has already started to pay attention to CCS, as well as to the proposed the concept of ‘CCUS’ (which adds CO 2 Utilization into the chain of capture, transportation and storage). However, CCS is still in the early stages of its technological development, and the high cost, with several internal and external uncertainties make the role that CCS can play in China's future emission reduction unclear. From the perspective of general equilibrium analysis, this paper introduces CCS into a regional energy–economy–environment integrated assessment model, and makes a comprehensive evaluation of CCS's potential for future development and contribution to emission abatement in China. At climate policy level, the potential contribution of CCS in emission abatement has been evaluated against different future emission constraint scenarios in China. At technological level, the effects of endogenous learning and policy incentives on CCS have been investigated, and the substitution capacities of CCS and Non-hydro renewables to fossil energy have been discussed, as well as their technology penetration rates. Furthermore, the impact of CO 2 utilization on the development of CCS has also been discussed.

Abstract With rapid economic growth in the past four decades, China has grown into the world's largest fossil fuel consumer and CO2 emitter. Surprisingly from a negligible level in early 2000s, the country has also become a global leader in solar PV utilization. In the past two decades of renewable energy development, wind power dominated before 2012, while annual solar PV installation quickly caught up afterwards. This article explains the solar PV trajectory as China followed the comparative advantage of wind power and solar PV, contingent upon their relative costs, for achieving renewable energy goals. We further explore why China with a tradition of central planning could approach the least-cost, market-oriented roadmap. Several factors were effective in enabling the “comparative advantage strategy” without central planning but mainly bottom-up decision making, including cost-conscious state-owned electric grid corporations, policy and goal evolution by implementation selection, and constrained solar lobby. This strategy could provide helpful insights for China and other countries for achieving their renewable energy development and CO2 mitigation commitments as well as other major policy goals.