Carbon Quota Research Articles

Research on the operation of integrated energy microgrid based on cluster power sharing mechanism

This paper proposes a Nash bargaining cooperative game model for a microgrid cluster system with double re-energy-load delay considering electricity, heat and gas multi-energy synergies. With the minimization of the operating cost of each microgrid as the objective function, a low-carbon operation model of a multi-energy complementary integrated energy microgrid considering fuzzy opportunity constraints is developed, an optimal operation mechanism including carbon quota and carbon trading is assessed, and a carbon capture system and an electricity-gas conversion device are added to the improved cogeneration unit model. Source-load uncertainty in microgrids is described in terms of new fuzzy parameters of new energy and undefined parameters of load demand. Each microgrid plays a second game with the marginal contribution rate and carbon trading cost rate as the bargaining power. The model is solved in a distributed manner using the ADMM-RGE algorithm. Finally, the simulation results show that the proposed multi-microgrid power-sharing way maximizes the benefits of microgrid alliances; the cooperative help of microgrid alliances is pretty distributed according to the size of each microgrid's energy contribution; carbon capture joint power-gas systems and energy sharing methods between microgrids can effectively reduce carbon emissions during microgrid operation.

An analytical model for enterprise energy behaviors considering carbon trading based on evolutionary game

Carbon trading market is a central policy tool for promoting cleaner enterprises' energy consumption and investment behaviors. It is crucial for enterprises to establish a green and low-carbon development model by clarifying carbon trading impact mechanism on enterprise behaviors and the interactive relationship between entities in the carbon market. China's contract-based carbon market is still in the development stage, the impact of the mainstream allowance mechanism and government regulation on enterprises' energy behaviors has yet to be determined. In view of this, this paper describes mathematical mechanisms of the influence of carbon prices and carbon quotas on enterprises' energy consumption and investment, and the evolutionary game model of government-enterprise behaviors is constructed, the evolution process and appropriate strategies of enterprises' energy behaviors in the development of the carbon market are discussed. This paper uses real data of China carbon market to simulate the model, it is found that strategies such as relaxation of carbon quotas and carbon subsidies dynamization are needed during the initial development of the market. In the mature stage of the carbon market, strategies are needed to increase the proportion of government carbon revenue and reduce its regulatory cost. The higher the initial willingness of government-enterprise, the better the effect of strategies and the constraints of public willingness. The model and results have theoretical implications for enterprises' energy transformation and government regulation, and provide a reference for the development of China's carbon market.

Impact of carbon quota allocation on equipment recycling by service-oriented manufacturers: The design of a coordination mechanism

Service-oriented manufacturing is an emerging approach in green manufacturing that involves recycling equipment by collecting, repairing, and returning it to the market after the lease period. This approach is cost-effective and environment-friendly, making it a popular choice among manufacturers. However, while various business models for service-oriented manufacturers have been investigated, less attention has been paid to optimal decisions and contracts to improve the efficiency of the service-oriented manufacturing supply chain under carbon quota allocation policies. For this reason, this study builds a game model, which consists of a service-oriented manufacturer and an operator in two cases, i.e., with or without carbon quota allocation. Our main findings are threefold. First, carbon quota allocation policies can raise the production costs entailed by operators, thereby increasing their threshold to voluntarily undertake equipment maintenance. Second, when the carbon trading price meets certain conditions, the operator's profits increase with the price and are greater than those of the non-carbon-quota policy model. The change in carbon trading price has no direct effect on service-oriented manufacturers, but indirectly affecting their profits. In other words, these profits decrease with carbon trading price. Third, the revenue-sharing contract is more effective in minimizing equipment failures and more environment-friendly when the service-oriented manufacturer's equipment failures are influenced by a range of factors.

Research on Supply Chain Pricing Strategies under Carbon Emission Quota Constraints

In order to reduce the carbon emissions of manufacturers and retailers in their business activities, carbon emission limits must be set for manufacturers and retailers respectively, and they must make favorable decisions within the limits. This paper will focus on a two-level supply chain system composed of a single manufacturer and a single retailer, and explore the optimal wholesale price, optimal retail price, and optimal profit under four scenarios: neither is constrained by carbon quotas, only the manufacturer is constrained by carbon quotas, only the retailer is constrained by carbon quotas, and both are constrained by carbon quotas, by constructing Lagrange functions. Comparative analysis will be conducted. Research has shown that only when manufacturers are subject to carbon quotas, the optimal wholesale and retail prices will rise, and the optimal profits of both manufacturers and retailers will decrease; When retailers are constrained by carbon quotas, whether manufacturers are constrained by carbon quotas does not affect the optimal price and profit; When both are subject to carbon emission restrictions and retailers increase their carbon emission quotas, manufacturers will lower wholesale prices and retailers will lower retail prices.

Carbon Emission Projection and Carbon Quota Allocation in the Beijing–Tianjin–Hebei Region of China under Carbon Neutrality Vision

Supported by the coordinated development strategy, the Beijing–Tianjin–Hebei (BTH) region has achieved rapid development but also faces severe energy consumption and environmental pollution problems. As the main responsibility of emission reduction, the coordinated and orderly implementation of carbon emission reduction in Beijing, Tianjin, and Hebei is of great significance to the realization of the carbon neutrality target. Based on this, this study comprehensively uses the expanded STIRPAT model, optimized extreme learning machine (ELM) network, entropy method, and zero-sum gains DEA (ZSG-DEA) model to explore the carbon emission drivers, long-term emission reduction pathway, and carbon quota allocation in the BTH region. The results of the driving factor analysis indicate that the proportion of non-fossil energy consumption is a significant driving factor for Beijing’s carbon emissions, and the improvement of the electrification level can inhibit the carbon emissions. The total energy consumption has the greatest impact on the carbon emissions of Tianjin and Hebei. The simulation results reveal that under the constraint of the carbon neutrality target, Beijing, Tianjin, and Hebei should formulate more stringent emission reduction measures to ensure that the overall carbon emission will reach its peak in 2030. The cumulative emission reduction rate should exceed 60% in 2060, and negative carbon technology should be used to offset carbon emissions of not less than 360 million tons (Mt) per year by 2060. Furthermore, the allocation results show that Beijing will receive a greater carbon quota than Hebei. The final allocation scheme will greatly promote and encourage carbon emission reduction in Hebei Province, which is conducive to achieving the goal of carbon neutrality.

Possible green-technology innovation motivated by China’s pilot carbon market: new evidence from city panel data

ABSTRACT Whether the carbon market can promote green technology innovation is a controversial topic because of an incomplete understanding of the mechanism and inconsistent datasets. This study first comprehensively explores the theoretical mechanism of the carbon market on green technology innovation from four aspects: the compensation effect, cost control motivation, crowding-out effect, and spillover effect. A sample of 209 cities in China is employed to empirically test the impact of China’s pilot carbon market on green technology innovation and its regional and industry heterogeneity using quasi-natural experiments. We found that China’s pilot carbon market has significantly promoted green technology innovation at the city level, especially in provincial capital cities, achieving a maximum effect two years after the shock. However, there is no significant spillover effect on the surrounding non-pilot cities, and Chongqing has realized the suppression of green technology innovation under the domination of the crowding-out effect. At the industry level, the pilot carbon market significantly promotes green technology innovation in the transportation, construction, chemical, and power industries but exhibits crowding-out effects in the steel industry. Finally, we propose policy implications for maintaining reasonable and stable carbon prices to stimulate compensation effects, scientifically determining the order of industry inclusion to avoid crowding-out effects, and accelerating inter-regional supply chains and technological cooperation to release spillover effects. Key policy insights: It is recommended to scientifically determine a reasonable carbon price range and introduce institutions, individuals, and other trading entities to improve the liquidity of the carbon market and the effectiveness of carbon prices. Considering the high cost triggered by the complex processes of the steel industry in developing countries, its inclusion may inhibit green technology innovation; thus, it is necessary to be cautious about including the steel industry in the carbon market. To build a carbon market in developing countries, the order of industry inclusion must be determined based on scientific calculations of the costs of green technology innovation in the industry. Avoid using self-declaration for carbon quota allocation and focus on improving national basic innovation capabilities to ensure the supply of green technology innovation.

Operation optimization of regional integrated energy systems

AbstractTo study the role of energy system demand‐side regulation capacity on carbon emission reduction, we proposed a regional integrated energy system (RIES) optimal dispatch model considering carbon trading cost and dynamic demand response (DR). First, based on the framework of the RIES, the impact of DR of transferable load, reducible load, and substitutable load demand on system operation, considering the response characteristics of electrical and thermal load, was analyzed. Second, the carbon quota of the system was analyzed, and the effect of carbon emissions and carbon capture technology on system operation was considered. Finally, a low carbon optimized operation model of RIES was established with system operating cost and operating efficiency as the target, and system capacity and energy storage power as the constraints. The effectiveness of the optimized operation of the improved intelligent evolutionary algorithm nondominated sorting genetic algorithm II (NSGA‐II) was verified as a research method. The results show that the energy efficiency of the system can be improved by tuning the DR of load demand with the application of the optimal operation model, and a coordination optimization on the economic and low carbon in RIES operation can also be achieved by the improved NSGA‐II algorithm.

Study on international carbon emission quota allocation of shipping industry-based on fairness and efficiency

In 2024, the EU intends to include the global shipping industry in the European Union Emission Trading Scheme (EU ETS). Shipping companies will have to pay for the carbon emissions of ships over 5,000 GT on routes between EU and non-EU ports. This paper selects typical shipping companies in the world. Based on the principle of fairness, historical method, baseline method and mixed method are adopted to explore their carbon emission quota allocation. The ZSG-DEA efficiency model is used to evaluate the distribution results and verify the optimal efficiency. The research results show that the mixed method has a high efficiency of allocation. The method predicts that the carbon quota of typical shipping companies in the world will reach the Pareto optimal allocation in 2024 and Maersk has the highest carbon emission quota among the eight typical shipping companies, reaching 32,431,800 tons, followed by MSC and EMC, reaching 8,542,400 tons and 6,809,500 tons, respectively. Based on the results, we can obtain a reasonable allocation of carbon allowances in the EU carbon market according to the proportion of business of shipping companies involved in EU routes. The research is still applicable to the allocation of carbon emmissions in future years. Therefore, this paper provides suggestions for the orderly allocation of carbon quota and carbon trading in the global shipping market.

Repurchase or pledge? Financing and production decisions of engineering machinery remanufacturing firms

Under carbon cap and trade policy, engineering machinery firms have engaged in remanufacturing and invested in carbon emission reduction technologies. However, they often struggle with a lack of funding, but carbon quota financing offers a solution. Taking a capital-constrained engineering machinery remanufacturer as the research object, this paper first formulates four decision models, i.e. (no capital constraints, no financing), (capital constraints, no financing), (capital constraints, carbon quota repurchase financing) and (capital constraints, carbon quota pledge financing), then the equilibrium results are compared. Finally, the numerical simulations are performed to study the impact of carbon emission reduction and quality uncertainty of recycled products. The results show that if remanufacturers possess adequate carbon quotas, carbon quota pledge financing can always improve profits effectively, otherwise, the effectiveness of financing strategies depends on the difference between extra profits and financing costs. Both financing strategies can increase the output of new products and reduce that of remanufactured products. Increasing the quality threshold of recycled products is beneficial for remanufacturing, environmental protection and profits. Investing in carbon emission reduction benefits remanufacturing and the environment, however, it reduces remanufacturers' profits in the short term.

Optimizing the emission control policies and trade-in program effects: A carbon-constrained closed-loop supply chain network model

Economic development and human activities affect the natural environment severely. The government has promogulated several policies such as carbon caps and trading scheme, government subsidies, and green credit to control emissions. Accordingly, enterprises should profit on the premise of undertaking social responsibilities, green technology and trade-in programs are two ways to benefit the environment. However, the interaction between regulations and emission abatement measures is largely unknown. A carbon-constrained closed-loop supply chain network model is proposed to discuss the joint effect of the policies and operational measures. The model is constructed under two scenarios, i.e., Manufacturer-led mode and Retailer-led mode. Sensitivity analysis is conducted to compare the scenarios. The results show that although the retailer-led mode promotes resource recovery and supply chain performance, it weakens manufacturers’ profit. We find that the carbon caps and trading scheme is effective in emission reduction when the initial carbon quota is relatively less, which indicates the importance of carbon caps allocation method. The government subsidies stimulate green manufacturers to do more emission reduction efforts enhancing sustainability. The subsidy on green products has more obvious effect on coordinating economic and environmental targets. We also reveal environmental awareness positively affects the emission abatement level. Finally, we extend our models to two special cases with (i) generalization of customers and (ii) different production cost function forms. The main conclusions remain valid in the special cases. The theoretically derived conclusions contribute to the operational research literature and will guide policymakers and enterprises in the manufacturing industry.

Effects of the carbon emission quota policy on the quality and sales of manufactured and remanufactured products

Low-carbon manufacturing is an inevitable way to achieve carbon neutrality. Further, implementing a carbon emission quota policy is an essential method for boosting the low-carbon transformation of the remanufacturing industry. Our study aims to improve the quality of remanufactured goods and promote the low-carbon, high-quality growth of the remanufacturing industry. Using a three-level supply chain comprising original equipment manufacturers (OEMs), independent remanufacturers (IRs), and retailers, we construct a game model with and without a government-implemented carbon emission quota policy. Subsequently, we examine the consequences of the carbon emission quota policy on product quality, sales, and price. We also determine the optimal range of carbon quota for governments to enforce carbon emission rewards and penalties to promote the low-carbon production of remanufacturing companies. By comparing the equilibrium results, we conclude that the carbon emission quota policy incentivizes IRs to upgrade the quality of remanufactured goods and expand production. Notably, when the carbon emission limit is less than the threshold, the policy significantly reduces the gross carbon emissions of OEMs and IRs. However, when the carbon emission limit is greater than the threshold, the effect on gross carbon emissions is negative. This study enriches the theoretical research on manufacturing and remanufacturing and provides decision support for governments to formulate a carbon emission quota policy. It also offers practical guidance for manufacturers and remanufacturers in making production decisions.

Analysis on China's provincial carbon emission quota allocation based on bankruptcy game

A reasonable allocation of carbon emission quotas is essential to improving the national unified carbon trading market. A bankruptcy game model is developed for allocating carbon emission quotas to Chinese provinces based on bankruptcy theory and the Nash bargaining game. The model takes into account the disparities that exist among these provinces. The allocation scheme under the carbon peak target can be obtained by using the projection pursuit model and the subject satisfaction function. The findings reveal that certain eastern provinces bear a greater responsibility in terms of historical carbon emissions. Furthermore, the rampant transfer of carbon emissions from energy-rich to energy-demanding regions has exacerbated the imbalance in regional development. Interestingly, the carbon emission demands are fulfilled in some provinces situated in the coastal regions of the southwest and southeast, such as Beijing, Tianjin, and Fujian. However, certain provinces in the northeast express the lowest levels of satisfaction with their carbon quota allocation, necessitating a greater burden of carbon emission reduction in the future. The research offers significant implications for regional development and carbon reduction efforts.

Low-carbon optimal dispatch of integrated energy system considering the operation of oxy-fuel combustion coupled with power-to-gas and hydrogen-doped gas equipment

To reduce carbon emissions and optimize energy utilization of integrated energy system (IES), an integrated electricity-heat-gas energy system containing coupled operation of oxy-fuel combustion capture and power to gas (OCC–P2G) and hydrogen-doped gas equipment is established in this paper. Firstly, the introduction of OCC technology transforms the thermal power unit into the OCC unit. The net output model of OCC unit and the equation of electric-carbon characteristic are established. Secondly, the two-stage refinement model of power to gas (P2G) and the model of hydrogen-doped gas equipment are constructed. Thirdly, considering the fairness principle of punishing positive carbon emissions and rewarding negative carbon emissions, a reward-penalty staircase carbon trading mechanism was constructed to constrain system carbon emissions. On this basis, an economic dispatch model of integrated energy system is established. The simulation results demonstrate that the ratio of wind abandonment is 0%, the actual carbon emission is only 35.08% of carbon quota, and the operation cost is only 237.1 thousand dollars. By setting multiple scenarios for comparative verification, the proposed strategy has lower economic cost and carbon emission.

Does the carbon emission trading scheme foster the development of enterprises across various industries? An empirical study based on micro data from China

To achieve the goal of carbon reduction, China has been piloting the Carbon Emission Trading System (CETS) since 2013. As the economy faces a downward trend, it is significant to explore the impact of CETS on business development. There is still debate in academia about whether this policy can boost the level of business development. This paper, based on all A-share data of listed companies in China from 2009 to 2018, uses the Difference in Differences (DID) model to verify the impact of CETS on the input of capital and labor factors and the level of technology in enterprises and discusses the industry heterogeneity of this impact in detail. Placebo tests, propensity score matching, and triple differences ensure the robustness of the conclusions. In further research, this paper decomposes the policy effect of CETS. It regresses the impact of carbon quota prices and carbon market trading scale on business development. The final conclusion is that CETS has a positive impact on the input of capital and labor in enterprises and a negative impact on the level of technology. After distinguishing industries, this conclusion shows differences according to different characteristics of high emissions and low emissions. In addition, the increase in carbon quota prices hinders business development, while the scale of carbon market trading shows an inverted “U” relationship with business development. The article provides meaningful policy references for China and countries in the early stages of CETS construction.

The unintended dilemma of China's target-based carbon neutrality policy and provincial economic inequality

Target-based carbon mitigation could be an essential strategy for achieving carbon neutrality. However, how carbon reduction will affect economic balance across different regions remains unclear. Here, with a newly developed dynamic multi-region computable general equilibrium model for China's 31 provincial economies, we examine the regional economic impacts of different carbon quota arrangement schemes. It is found that without fostering new growth engines driven by low-carbon industries, the national stringent carbon restrictions will bring an ‘economic sabotage’ with deteriorated regional equity and polarized the industrial structures, especially in the fossil-fuel reliant north China. Carbon shadow prices and costs play a prominent role and cause rippling effects in this regionally imbalanced recession, depending on energy, industrial structures and endowments. Furthermore, no prevailing carbon quota arrangements, either by historical, intensity, or capacity rules, could resolve the dilemma between equality and effectiveness in our simulation. By contrast, to offset the regionally unbalanced shock of decarbonization, it is important to cultivate low-carbon industries timely to compensate for the potential transition costs in the long run.

Information gap decision theory-based optimization of joint decision making for power producers participating in carbon and electricity markets

Carbon markets have been established in many countries and regions with the goal of promoting global carbon neutrality. The position of power producers as the dominant carbon emitters necessitates that they engage in both electricity and carbon markets. However, most studies have considered only short-term electricity markets and unrealistically static carbon markets, and the speculative behavior of power producers in the carbon market remains poorly considered. The present study addresses these issues by proposing an optimized joint decision model based on information gap decision theory to facilitate the participation of power producers in annual and monthly electricity markets, and monthly carbon markets, where uncertainties in the prices of electricity and carbon quotas, and the speculative behavior of power producers in the carbon market are explicitly considered to ensure that the revenues of market participants do not fall below a predetermined minimum acceptable value. The results of simulations based on the rules and actual market data obtained for electricity and carbon markets in a specific province of China demonstrate that the proposed model provides power producers with trading solutions to meet different expected revenue targets, and thereby assists them as much as possible in counteracting the risks to profit associated with fluctuations in electricity and carbon market prices.

The effect of carbon tariffs and the associated coping strategies: A global supply chain perspective

Carbon regulation differences are the main obstacle to global carbon emissions reductions. To alleviate the global environmental pressures from carbon emissions, high-carbon-regulated countries are seeking to impose carbon tariffs on imported products. In response, low-carbon-regulated countries can choose to allocate carbon quotas on manufacturers (H strategy) or provide subsidies to reduce their emissions reduction costs (S strategy). Therefore, it is worth exploring the joint impact of carbon tariffs and the associated coping strategies. In this context, this paper explores optimal manufacturing production and emissions reductions, analyses the impact of carbon tariffs on carbon emissions and social welfare, and examines strategy selection in low-carbon regulated countries. It is found that both the production and profits for manufacturers with relatively low carbon emissions reduction costs can increase with carbon tariffs. When a carbon tariff is fixed, the response strategy in low-carbon-regulated countries can either increase or decrease global carbon emissions. Carbon tariffs always have a negative impact on the social welfare of low-carbon-regulated countries. Interestingly, carbon tariffs may also harm the social welfare of high-carbon-regulated countries, especially when their manufacturers have high emissions reduction costs. Finally, as for social welfare in low-carbon-regulated countries, high-carbon-regulated countries, and the global community, both H and S strategies can be win-win strategies when emissions reduction cost subsidies are moderate. However, when emissions reduction cost subsidies are high, H strategy is found to be a win-win strategy.

How do carbon trading price and carbon tax rate affect power project portfolio investment and carbon emission: An analysis based on uncertainty theory

Responding to the social, economic, and environmental call to resolve current sustainability challenges, the concern about carbon dioxide emission reduction should be incorporated into the power investment decision process. Reflecting the low carbon emission requirement, this paper proposes a new optimization model for power project portfolio selection that simultaneously considers both of carbon emission trading scheme and carbon tax imposition. In this model, the initial investment outlay, the power sale price, the carbon trading price, and carbon tax rate are treated as uncertain variables considering the fast-changing environment and complex market situation. Incorporating the constraint on whether the carbon quota is exceeded into the model, two investment strategies are proposed for investors. Using the proposed model, the impact of the rises in carbon trading price and carbon tax rate on the investor’s investment strategy selection and the carbon emission is simulated and analyzed through a case study. When the expected carbon price is 203.50 RMB/tCO2-eq or less, a company should invest based on the strategy that annual emissions exceed the quota to obtain a maximum expected NPV which is larger than 408588 million RMB. When future carbon prices are 352.00, 500.50 and 649.00 RMB/tCO2-eq, the government should impose carbon tax rates of 30, 30, and 40 RMB/tCO2 on a power company, respectively, to obtain carbon emission reduction effect. At last, to see the contrast effect of the results from simultaneous implementation of both carbon trading and carbon tax, the results considering the carbon trading alone or carbon tax alone are discussed, respectively.

Competitive firms’ low-carbon technology diffusion under pollution regulations: A network-based evolutionary analysis

To investigate the diffusion degree of low-carbon technology in competitive firms and the influence of different pollution regulations, we constructed an evolutionary game model representing three environmental mechanisms: total amount control and trading, carbon tax, and subsidy, within a complex firm network. By analyzing the effects of carbon quotas, tax rates, and subsidy rates, we comprehensively assessed the performance of these mechanisms in terms of diffusion degree, firm profits, consumer surplus, environmental damage, and social welfare. The study results demonstrated distinct outcomes for each environmental mechanism. Under the subsidy mechanism, low-carbon technology exhibited the highest diffusion degree, suggesting its efficacy in promoting widespread adoption. However, it is worth noting that the higher the subsidy, the more environmental pollution it led to, which presents a trade-off between environmental benefits and financial incentives. On the other hand, the carbon tax mechanism resulted in minimal pollution, reflecting its potential as an effective tool for environmental regulation. Finally, the cap-and-trade mechanism emerged as the most favorable option, as it maximized social welfare while effectively addressing environmental concerns.

Carbon emission quotas and a reduction incentive scheme integrating carbon sinks for China's provinces: An equity perspective

Allocation of carbon emission rights, which is fundamental to incentive mechanisms such as quota trading, carbon sink construction, and emission reduction, and related to the development space of some traditional industries, must balance efficiency and equity with economic benefit and environmental protection. We apply the entropy right method and integrate the four principles of fairness, responsibility, efficiency, and security from an equity perspective to analyze the allocation of carbon quotas among China's provinces. We integrated carbon sinks and carbon emission rights into the same accounting system to comprehensively identify surplus space, and use it to propose carbon offset and carbon emission rights trading scheme. An empirical study of China's provinces revealed that the carbon-sink-based allocation scheme achieved compensation from developed provinces with carbon deficits to less-developed provinces with carbon surplus. From an equity perspective, the emission reduction scheme realizes the original intentions of making developed regions take greater responsibility for emission reduction, giving less-developed regions scope for emission reduction and strengthening penalties for excessive carbon emissions. The findings reflect the direct impact of carbon sinks on carbon emission rights allocation and encourage the construction of carbon sinks while contributing to coordinated regional development.