• Energy Research
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The emissions trading scheme (ETS) has been long advocated to address climate change not only because it is cost effective but also because it can provide economic incentives for the adoption of new technologies. The emissions abatement of the energy-intensive sector covered by ETS is of great significance for the whole nation to attain sustainable and low-carbon development, especially for developing countries. This paper investigates the effect of market power in the emissions trading market on the diffusion of a new emissions abatement technology when firms in the energy-intensive sector interact in an imperfectly competitive output market. In the model, each firm needs to determine the optimal time to adopt the new emissions abatement technology, taking into account its benefits and costs, as well as its rival’s strategic behavior. With this framework, the results suggest that firms will delay adoption of the new emissions abatement technology in the presence of market power. Moreover, when the output demand is larger and more elastic, emissions abatement technology diffusion will occur earlier. It implies that the technology diffusion in the weak elastic sector, such as the Chinese iron and steel sector, may have more barriers than that in the strong elastic sector, such as the Chinese nonferrous metals sector.

The petroleum refining sector is energy intensive and has been identified as one of the target industries for CO2 emissions control by China’s emissions trading scheme. A detailed accounting of the cost of emissions reduction is of great significance for the petroleum refining sector to comply with emission reduction target. In this paper, six categories of CO2 abatement technologies are identified in China’s petroleum refining sector, their CO2 emissions reduction cost as well as the potential are estimated using a bottom-up method. Most of the technologies in the sector are cost-effective, which has contributed approximately 76.4% of sectoral total emissions reduction. New equipment technology provides the greatest contribution to emissions reduction, while new materials technology offers the lowest contribution. The implementation of the emissions trading scheme will increase the potential for emissions reduction only if the CO2 price can be higher than 200 CNY/t. Given the amount of emissions reduction that technologies can provide will not exceed 40% of the total emissions; firms must find more diversified ways when facing more stringent emissions control.

Robust mitigation options will play significant role in achieving the target of limiting global change to below 1.5 °C above pre-industrial levels by 2100. To support cooperation for mitigation development, we establish a real options-based model to evaluate the rational decisions of exercising the abandon option for carbon capture and storage-enhanced oil recovery (CCS-EOR) projects under oil market and geological uncertainties. Three possible cooperative mechanisms (fixed carbon dioxide (CO2) price, oil-indexed CO2 price, and joint venture contracts) among CO2-EOR stakeholders are evaluated. The results show that the conflicts in profit maximization targets for different stakeholders in cooperative mitigation are to a great extent unable to be avoided. A joint venture business model is preferred in cooperative mitigation as it can effectively weaken such conflicts. And it is more reasonable to provide incentives to the downstream of the CO2-EOR chain than compensating the adoption cost of carbon capture technologies in the upstream. From a global perspective, the inefficient cooperation can be a main barrier that hinders the development of deep-cutting options. Global mitigation strategies should not only focus on promoting technology progress but also the design of innovative business models to balance the benefits among stakeholders. A joint venture business model is recommended in both the developed and developing countries for seizing the early mitigation opportunities.

Climate policies making are strongly impacted by the approach of damage evaluation. China is leading carbon dioxide (CO2) emissions in the world, and has agreed with Paris agreement to reduce CO2 emissions. China is also expected to be negatively impacted by climate change. One of main concerns is how to assess and monetize the climate damage from country-specific level. This paper builds a model comprising two approaches of damage evaluation and assesses China’s mitigation and adaptation responses by 2100 for both of no policy and Paris agreement policy. It has the following findings: First, the emissions pathway and nonfossil fuel consumption share of total energy consumption differs slightly between the two approaches of damage evaluation. Second, with the Burkes approach, the climate damage avoided by adaptation is increasingly higher than that by mitigation when investment in adaptation starts to be massively injected with faster increasing trend by 2045. Third, climate expenses should be invested more to address higher level of the climate damage evaluated by the Burkes approach than by the Mannes approach. Fourth, the main findings in this paper are robust in terms of uncertainties in the parameters of damage function.

Abstract Solar power has achieved great development in the last decade, and it should continue to play a central role in the face of climate change and sustainable development challenges. This paper builds a real options model that provides a microeconomic analytical framework with the Least Squares Monte Carlo (LSM) method to assess the investment choices of a typical solar panel producer in China facing trade and domestic supply- and demand-side policy uncertainties. It builds a baseline scenario and three policy scenarios with decreasing anti-dumping and countervailing charges, constant feed-in tariff (FIT) level and reduced investment cost. A typical producer will have to make an investment decision on building a new production line in five years based on a decision impact analysis within 20 years. The result shows an immediate investment decision for all scenarios. The producer will have higher return from investment in building a solar power plant with a constant FIT. Export is the optimal choice in other scenarios where investment return is lower. After sensitivity analysis, the paper concludes and can be used as a toolkit for solar panel producers and a reference for policy makers to evaluate the impact of policy uncertainties.

China has surpassed the United States to be the world's largest energy consumer, but a lot of energy was used to produce products for exporting to other countries. Presently, China faces a great challenge in energy security and environmental protection. This paper focuses on the energy embodied in China's foreign trade with a multi-regional input–output approach. Three versions of the GTAP (Global Trade Analysis Project) database were used to capture the trend and distribution of the embodied energy flows for China during 2001–2007. The results indicate that the energy embodied in the global trade is increasing rapidly, growing faster than the total direct energy exported in the same period. China is shown as an energy exporter in terms of embodied energy, and the embodied energy trade surplus increased from 156 million tons of oil equivalents (Mtoe) in 2001 to 514 Mtoe in 2007, with a proportion of domestic energy consumption increased from 14% to 23%. This paper also studies the effects of the energy-intensive industry restrictive export policy of China, and we find that this policy could reduce the national energy consumption and promote industrial structure upgrades effectively. However, the expansion of energy-intensive industries in other countries may reduce China's efforts for global energy saving and global warming alleviation. Our simulation shows that carbon leakage is about 50%.

This paper establishes a carbon capture and storage (CCS) investment evaluation model based on real options theory considering uncertainties from the existing thermal power generating cost, carbon price, thermal power with CCS generating cost, and investment in CCS technology deployment. The model aims to evaluate the value of the cost saving effect and amount of CO(2) emission reduction through investing in newly-built thermal power with CCS technology to replace existing thermal power in a given period from the perspective of power generation enterprises. The model is solved by the Least Squares Monte Carlo (LSM) method. Since the model could be used as a policy analysis tool, China is taken as a case study to evaluate the effects of regulations on CCS investment through scenario analysis. The findings show that the current investment risk of CCS is high, climate policy having the greatest impact on CCS development. Thus, there is an important trade off for policy makers between reducing greenhouse gas emissions and protecting the interests of power generation enterprises. The research presented would be useful for CCS technology evaluation and related policy-making. (C) 2011 Published by Elsevier Ltd.

In this paper, we assess 13 process technologies to improve energy efficiency in the Chlor-Alkali sector of Shandong province in China up to 2025 using a techno-economic approach. The results show energy efficiency improvement (EEI) potentials of 9% in the caustic soda and 38% in the polyvinyl chloride (PVC) production process compared to a frozen-efficiency development. The most influential technologies are energy-efficient electrolysis technology in brine electrolysis step and heat recovery technology in Vinyl Chloride Monomer synthesis (VCM) step. The energy savings can be translated into mitigated CO2 emissions of 10 Mt in 2025. The larger part of this potential is found to be cost-effective from a firm's perspective. In conclusion, significant saving potentials are still available. However, to achieve the all potentials, additional energy policies are needed.

China has the world’s highest levels of carbon dioxide (CO2) emissions, and its adoption of optimal measures to address climate change is extremely important. In this article, we assess the performance of various Chinese policies aimed at addressing climate change in terms of cost effectiveness, cost-benefit efficiency, and their contribution to a reduction in emissions with a new single-region model, DEMETER-CCPE. Our analysis shows that the performance of these Chinese policies strongly depends on the principles and indicators used in the evaluation. When climate-specific cost indicators are considered, the mixed policy performs best in terms of cost reduction. When cost-efficiency indicators are used, a single policy performs better to some extent. From the perspective of evaluating the contribution to emissions reduction, the development of non-fossil-fuel-based energy technologies offers the greatest opportunity for reducing emissions in a mixed-policy scenario. Finally, this article study possible ‘burden’ and ‘free-rider’ scenarios in order to explore the effect of different levels of joint actions between China and the rest of the world (ROW) on a performance evaluation of policies to address climate change.