Carbon emissions market adjustment in the electricity supply sector: A government perspective

Abstract

The atmospheric warming associated with anthropogenic climate change can be mitigated by pricing carbon emissions and especially through carbon emissions trading schemes (ETS). To this end, a multi-objective bi-level programming model that considers the mutual interactions between the government and power projects is developed to determine an appropriate carbon price to achieve carbon intensity minimization and revenue maximization. Goal programming is employed for the multi-objective programming and an interactive particle swarm optimization and simplex method (IPSO-SM) mechanism is developed to solve the proposed model, the effectiveness of which is verified in a real-life case study. The results suggest that the government can adjust carbon emissions market by auctioning or repurchasing carbon allowances to achieve a balance between environmental protection and economic development, and that the carbon trading decisions of the power projects depended on the comparison of the carbon shadow prices and market carbon price, which constituted the bidding mechanism, formed the carbon price supply and demand curve, and ultimately determined the carbon price.