Carbon emission trading system of China: a linked market vs. separated markets

Yu LIU, Shenghao FENG, Songfeng CAI, Yaxiong ZHANG, Xiang ZHOU, Yanbin CHEN, Zhanming CHEN

Front. Earth Sci. ›› 0

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PDF(207 KB)
Front. Earth Sci. ›› DOI: 10.1007/s11707-013-0385-8
RESEARCH ARTICLE
RESEARCH ARTICLE

Carbon emission trading system of China: a linked market vs. separated markets

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Abstract

The Chinese government intends to upgrade its current provincial carbon emission trading pilots to a nationwide scheme by 2015. This study investigates two of scenarios: separated provincial markets and a linked inter-provincial market. The carbon abatement effects of separated and linked markets are compared using two pilot provinces of Hubei and Guangdong based on a computable general equilibrium model termed SinoTERMCo2. Simulation results show that the linked market can improve social welfare and reduce carbon emission intensity for the nation as well as for the Hubei-Guangdong bloc compared to the separated market. However, the combined system also distributes welfare more unevenly and thus increases social inequity. On the policy ground, the current results suggest that a well-constructed, nationwide carbon market complemented with adequate welfare transfer policies can be employed to replace the current top-down abatement target disaggregation practice.

Keywords

linked market / carbon emission trade / SinoTERMCo2

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Yu LIU, Shenghao FENG, Songfeng CAI, Yaxiong ZHANG, Xiang ZHOU, Yanbin CHEN, Zhanming CHEN. Carbon emission trading system of China: a linked market vs. separated markets. Front Earth Sci, https://doi.org/10.1007/s11707-013-0385-8

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Acknowledgements

This research is supported by the National Basic Research Program of China (No. 2012CB955700).

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2014 Higher Education Press and Springer-Verlag Berlin Heidelberg
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