Abstract
This paper establishes an agent-based simulation system of the carbon emissions trading in accordance with the complex feature of the trading process. This system analyzes the impact of the carbon quota allocation mechanism on emissions trading for three different aspects including the amount of emissions reduction, the economic effect on the emitters, and the emissions reduction cost. Based on the data of the carbon emissions of different industries in China, several simulations were made. The results indicate that the emissions trading policy can effectively reduce carbon emissions in a perfectly competitive market. Moreover, by comparing separate quota allocation mechanisms, we obtain the result that the scheme with a small extent quota decrease in a comprehensive allocation mechanism can minimize the unit carbon emission cost. Implementing this scheme can also achieve minimal effects of carbon emissions limitation on the economy on the basis that the environment is not destroyed. However, excessive quota decrease cannot promote the emitters to reduce emission. Taking into account that several developing countries have the dual task of limiting carbon emissions and developing the economy, it is necessary to adopt a comprehensive allocation mechanism of the carbon quota and increase the initial proportion of free allocation.
Highlights
According to the fifth assessment report by the Intergovernmental Panel on Climate Change (IPCC), the excessive emissions of greenhouse gas cause the frequent occurrence of extreme weather on earth, which threatens the safety of human society and the natural system
We study the carbon quota transaction and its economic impact on the industry in different carbon quota allocation mechanisms
We come to the following conclusions: (1) In the assumption of the perfectly competitive market and zero transaction costs, the carbon quota transaction policy mechanism can significantly bring about carbon emissions reduction
Summary
According to the fifth assessment report by the Intergovernmental Panel on Climate Change (IPCC), the excessive emissions of greenhouse gas cause the frequent occurrence of extreme weather on earth, which threatens the safety of human society and the natural system. Countries which exert an important impact on the world economy, such as China, usually have large amounts of carbon emissions. Their energy structure is mainly composed of oil and coal with high carbon content. It may threaten the economic development security of a country while decreasing the carbon emissions only by limiting the energy usage. Emissions trading is a typical policy instrument based on the market environment It limits the pollutant emissions of each emitter and allows the emitters to transact with each other to achieve the discharge standard by implementing the pollutant discharge permit system. The capital expenditure or income during the emissions trading process, in turn, shall encourage the emissions reduction behavior of the emitters
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