Econo-environmental equilibrium based power generation and trading plan towards coordination of market incentives

Abstract

When seeking a low-carbon energy transition, market incentives are less costly, the most representative of which have been tradable green certificate (TGC) and carbon emission trading (CET). However, the coordination of these two incentives has been ignored, resulting in economic and environmental conflicts. Therefore, this study considered TGC and CET policies and proposed a multi-objective equilibrium model through a power generation and trading plan that minimizes carbon emissions and total costs. A case study from Guangdong, China, is given to demonstrate the practicality of the proposed model, from which it was found that an econo-environmental equilibrium plan could reduce carbon emissions by 13.2% with only a 2.3% increase in total costs. To explore the policy impacts, sensitivity analyses of quotas and five-scenario analyses considering different decision-makers’ preferences were conducted. It was found that when the free CET quota varied from 0.95 to 0.25, there were carbon emissions reduction redundancies, and TGC quota changes exposed provincial disparities in wind and solar power generation and trading promotion. The mix policy decreased coal power generation and, depending on government preferences, conditionally promoted solar power generation and trading. Policy suggestions to better coordinate the market incentives are also given.