Energy and Environmental Systems |
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How to auction carbon emission allowances? A dynamic simulation analysis of spatiotemporal heterogeneity |
Xianyu YU1, Luxi XU2, Dequn ZHOU1, Qunwei WANG1( ), Xiuzhi SANG2( ), Xinhuan HUANG |
1. College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China; Research Centre for Soft Energy Science, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China 2. College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China 3. School of Economics, Fujian Normal University, Fuzhou 350117, China |
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Abstract There is notable variability in carbon emission reduction efforts across different provinces in China, underscoring the need for effective strategies to implement carbon emission allowance auctions. These auctions, as opposed to free allocations, could be more aligned with the principle of “polluter pays.” Focusing on three diverse regions — Ningxia, Beijing, and Zhejiang — this study employs a system dynamics simulation model to explore markets for carbon emissions and green certificates trading. The aim is to determine the optimal timing and appropriate policy intensities for auction introduction. Key findings include: (1) Optimal auction strategies differ among the provinces, recommending immediate implementation in Beijing, followed by Ningxia and Zhejiang. (2) In Ningxia, there’s a potential for a 6.20% increase in GDP alongside a 21.59% reduction in carbon emissions, suggesting a feasible harmony between environmental and economic objectives. (3) Market-related policy variables, such as total carbon allowances and Renewable Portfolio Standards, significantly influence the optimal auction strategies but have minimal effect on carbon auction prices.
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Keywords
carbon allowances
carbon allowance auctions
carbon emissions trading
Renewable Portfolio Standard
system dynamics
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Corresponding Author(s):
Qunwei WANG,Xiuzhi SANG
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Just Accepted Date: 29 May 2024
Online First Date: 07 June 2024
Issue Date: 26 September 2024
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