An integrated CO2 tax and subsidy policy for low carbon electricity in Guangdong, China

Abstract

ABSTRACTIn order to tackle climate change, Guangdong has been chosen as an experimental province for low carbon transition by the Chinese government. To analyze the low carbon transition of the electricity sector in Guangdong, a techno-economic model is developed. By applying the model, the policies of CO2 tax and subsidy are analyzed first. Based on the analysis, an optimal integrated CO2 tax and subsidy policy is designed to exert positive pole and limit negative effects of a simple CO2 tax or subsidy policy. As a result, the development of renewable power can be incentivized efficiently and the development of coal-fired power plants can be inhibited. The CO2 emission per unit electricity supply can be reduced about 25.1% by 2020 compared with that in 2007.The cost of unit electricity supply will increase about 15.1%, which is close to that in a no-policy scenario and similar to the historical level.