Emissions In China Research Articles

Price and scale effects of China's carbon emission trading system pilots on emission reduction

Constructing and adopting a county-level panel dataset containing carbon emission (CO2) and economic information between 2009 and 2017, this paper employs the continuous difference-in-differences (DID) model and is among the first to conduct an evaluation of the CO2 reduction effect of China's emission trading scheme (ETS) pilot markets from the dual perspectives of price and scale. The empirical results emerge that the increase of transaction price and the expansion of transaction volume in ETS pilots have a persistent and significant influence on CO2 reduction. Parallel to this, it is found the rising of transaction price in ETS can be effective on CO2 reduction by improving the energy structure transition, however, optimization of industrial structure and the development of ICT might be the essential channels driven by the expansion of transaction volume. Last, this paper identifies the synergistic effect on different sorts of contaminants and find it is more substantial to those with the gas state. This paper implies that the policymakers should fully excavate the market-oriented environmental regulation tools from transaction price and volume perspective of views for the well achieving the climate ambitions of carbon peak and neutrality.

How does carbon emission price stimulate enterprises' total factor productivity? Insights from China's emission trading scheme pilots

Carbon emission price of Emissions Trading Scheme (ETS) reflects firms' marginal cost of emission, while no previous literature discusses whether it is consistent with the Porter hypothesis or not. Based on a rounded and unique fir-level longitudinal dataset with the information of total factor productivity (TFP) and the economic variables from 2009 to 2019, this paper employs the time-varying difference-in-differences (TDID) model and conducts a post-evaluation of the carbon emission price of ETS pilots on firms' TFP for the first time. The results show that there exists a persistent and significant positive causal relationship between the carbon emission price and firms' TFP. According to a rough estimate, the Chinese firms' TFP should increase by approximately 22.73% if it reaches the same carbon emission price as EU ETS. Our empirical results have passed the placebo test as well as the common trend test, and is mainly consistent with the PSM-DID approach, which can further eliminate the possible selection bias. Furthermore, the influence of the carbon emission price is more evident among the state-owned firms located in the eastern China. While the spillover effect is not significant, which means the price effect is merely effective on target industries. Most importantly, the mechanism analysis shows that it is an effective way to improve firms' TFP by investing more on R&D patents and funds, as well as promoting the status of R&D executive. Based on our findings, we suggest that: 1) the policymakers should restrict CO2 emission quotas so as to guarantee the carbon emission price with a certain upward trend appropriately; 2) researchers should further explore the ways to activate the market-oriented environmental regulation tools from the perspective of the carbon emission price for better designing a unified carbon ETS market.

Review of recent progress of emission trading policy in China

Global warming caused by the excessive combustion of fossil fuels has become the focus of the international community. China's carbon emission reduction policy plays a vital role in international climate change, carbon emission neutrality and domestic environmental pollution control. This paper summarises the progress of China's Emission Trading Scheme (ETS) pilots from 2011 to 2021, including trading volume, carbon emissions price, and the effect of carbon emission abatement. By calculating the carbon emissions intensity decrease rate of China's ETS pilot and non-pilot regions, the ETS and carbon emissions tax are compared in terms of emission reduction effectiveness, emission reduction cost and implementation resistance to provide theoretical support for the Chinese government to select and develop carbon emission reduction tools. The development of the Clean Development Mechanism in China is also compared with China Certified Emission Reduction (CCER), and the offsetting rules of CCER are summarised. After the whole analysis and assessment, the results show that from 2013 to 2018, the average carbon emissions intensity decline rate in the ETS pilots was 7.3% and that in non-pilots was 4.29%. Some problems of China's carbon emissions trading market are also concluded. The trading volume is small (only 43.4 × 106 t in 2020) and is discrepant greatly in the different ETS pilots. The carbon emissions price is low (only 33.45 Yuan/t in 2020), with high volatility and large price differences among the ETS pilots. Based on the existing problems, this paper proposes some suggestions for improving China's emission trading market and provides theoretical and decision-making support for promoting carbon emission reduction and neutralisation for China.

Persistent mitigation efforts and implications for China's emissions peak using statistical projections

To keep global warming below 2 °C by 2100, as per the Paris Agreement, China has announced to peak its CO2 emissions before 2030. Several studies have explored the emissions trajectories in China, but it is as yet uncertain how persistent mitigation efforts of individual provinces and sectors will impact the achievement of ambitious emissions reduction goal. Here we develop a Markov Chain Monte Carlo (MCMC) Bayesian analysis with a modified Kaya identity to project the CO2 emissions in China before 2050. We find that, with persistent mitigation efforts, China can reach an emissions peak in 2032 at 13395 Mt. CO2, which is later than its announced time. Moreover, China's total emissions will reduce slowly after peaking time, with an average annual reduction rate of 0.47%. There are 15 provinces whose emissions will peak before 2030, while 11 provinces can peak during 2030–2050, and 4 provinces can hardly obtain the peak before 2050. Future emission decreases result from the interplay between a rapid reduction driven by decreasing emission intensities, especially in industry, against the increases from economic and population growth. In addition, we find an important mitigation impact from economic structure shift towards services. Such information will be necessary for China's future low-carbon development and will provide implications for policy making.

A review and evaluation of nonroad diesel mobile machinery emission control in China

China's emission control for nonroad diesel mobile machinery (NDMM) must deal with a fast increase in stock as well as regulations that are two decades behind those for on-road vehicles. This study provides the first large-scale review and evaluation of China's NDMM policies, along with emission measurements and an investigation on diesel fuel quality. The sulfur contents of the investigated diesel declined from 430 ppm (median value) in 2011 to 6-8 ppm during the 2017-2018 period. The emission control of NOx and PM greatly improved with the shift from the China II to China IV standards, as demonstrated by engine tests and field NOx measurements. However, the NOx emission factors for non-type-approved engines were approximately twice the limits of the China II standards. Emission compliance based on bench tests was not sufficient to control actual emissions because the field-measured NOx emission factors of all machinery ranged from 24% to 225% greater than the respective emission limits for the engines. These circumstances adversely affected the effectiveness of the regulations and policies for China's emission control of NDMM. Nevertheless, the policies on new and in-use NDMM, as well as diesel fuel quality, prevented NOx and PM emissions amounting to 4.4 Tg and 297.8 Gg during the period 2008-2017, respectively. The emission management strategy contributed to enhancing the international competitiveness of China's NDMM industries by promoting advanced technologies. For effective NDMM emission control in the future, portable testing and noncontact remote supervision should be strengthened; also, the issue of noncompliant diesel should be addressed through rigorous control measures and financial penalties.

Carbon price prediction for China's ETS pilots using variational mode decomposition and optimized extreme learning machine.

With the national goal of “carbon peak by 2030 and carbon neutral by 2060 in China”, studies on carbon prices of China’s Emissions Trading System (ETS) pilots have shown growing interest in the related fields. Carbon price fluctuations reflect the scarcity of carbon resources, and accurate prediction can improve carbon asset management capabilities. Therefore, in order to clarify the dynamics of carbon markets and assign carbon emissions allocation rationally, we propose a hybrid feature-driven forecasting model with the framework of decomposition-reconstruction-prediction-ensemble. In this paper, the non-stationary, nonlinear and chaotic characteristics of carbon prices in China’s ETS pilots have been verified, and then the prediction model is built based on the tested features. Firstly, the original carbon price series are decomposed by Variational Mode Decomposition (VMD), and then reconstructed by Sample Entropy (SE). Next, Extreme Learning Machine (ELM) optimized by Particle Swarm Optimization (PSO) is conducted to predict the subsequences. Lastly, the forecasting series of every subseries are summed to obtain the final results. The empirical results based on carbon prices of China’s ETS pilots proved that the proposed model performs more efficiently than the current benchmark models. As carbon prices are expected to increase across all ETS during the post-COVID-19 recovery stage, the new prediction model will be useful for improving the guiding principles of the existing government policies including the likely introductions of Border Carbon Adjustment (BCA) in the EU and the US, and governing the large global public companies to deliver their “net zero” commitments.

Impacts of poverty alleviation on household GHG footprints in China

Eradicating poverty and mitigating greenhouse gas (GHG) emissions are core issues of global sustainable development goals (SDGs), and China is struggling in realizing these targets. The poverty reduction that leads to popualtion structure and lifestyle changes would have an impact on GHG emission changes. However, few studies have assessed the historical and future impacts of the poverty allevation on China's emissions. Here by linking Chinese Multi-Regional Input Output (MRIO) database to the global MRIO database EXIOBASE, and using provincial household consumption data, we identified the distribution of Chinese household greenhouse gas footprints (HGFs) by income groups in 2015 at the national and provinical levels. Moreover, we focused on the historical impact of poverty alleviation on HGFs during 2010–2015, and developed four scenarios to project future HGFs changes due to poverty alleviation by 2030. We find that eradicating extreme poverty in the secanrio S2, i.e., bringing people to an income above $1.9 daily, does not cause a large emission impact with current technological level. However, lifting people from a higher poverty line of $5.5 per day in the sceanrio S4 results in a 1.6% increase in emissions compared with the scenario S1 without any poverty reduction goals. Furthermore, realizing a higher poverty reduction target will result in an increase of emissions contribution from internatioanl supply chains due to the differences in consumption patterns among different income groups. Our study highlights the conflict between the high poverty alleviaition goal and emission reduciton in China, and reminds us of the need to make more technological efforts for avoiding the large emissions embodied in international supply chains.

Large inter-city inequality in consumption-based CO2 emissions for China's pearl river basin cities

Cities are leading carbon mitigation but are heterogeneous in their mitigation policies due to different socioeconomic backgrounds. Given that cities are increasingly inextricably linked, formulating mitigation policies of different cities cannot be easily achieved without comprehensive carbon inventories, who taking the inter-city supply chains into account. The Pearl River Basin is one of the important economic zones in China, with huge disparity in its cities, but very limited information is available on their consumption-based CO2 emissions. To fill this gap, we compiled a consumption-based inventory of 47 cities in the Basin for 2012. We found that the total consumption-based emissions of 47 cities was 933.8 Mt, accounting for 13.1% of China's emissions. There were huge differences in the consumption-based emissions, ranging from 3.6 Mt (Heyuan City) to 153.1 Mt (Shenzhen City). The consumption-based emissions were highly concentrated in the largest seven cities, which accounted for 52.8% of the total emissions of the Basin. The consumption-based emissions per capita also varied greatly, from 1.2 to 14.5 tons per capita. Large scale infrastructure was the biggest driving force for most cities, resulting in 42.1% to 75.6% of the emissions. At sector-level, construction, heavy industry and services were leading in emissions, contributing more than 80% of emissions. The major inter-city carbon transfers occurred within upstream cities in the developing regions and downstream cities in the Pearl River Delta respectively, instead of the transfers between upstream and downstream cities. The findings highlight that the regional mitigation strategies could mainly focus on cities in intra-province boundary, rather than inter-province boundary, and also the city-level mitigation strategies should pay attention to the key emission sectors and drivers in respect of the heterogeneity of cities.

Assessment of a low-carbon natural gas storage network using the FLP model: A case study within China–Russia natural gas pipeline East Line's coverage

The China–Russia Natural Gas Pipeline East Line is considered a guarantee for China's natural gas import and supply and an exceptional opportunity to boost natural gas infrastructure in Northeast China, including natural gas storage and connecting pipelines. As a pipeline network covering 14% of China's total land area, it is important to understand the optimal distribution of natural gas storage and carbon emissions to meet China's emission peak and neutrality targets. In this study, we provided an approach using the facility location problem model to determine locations of natural gas storage facilities for prefectural cities in Northeast China within the coverage of the China–Russia Natural Gas Pipeline East Line under five different pipeline layouts, including the current one. Natural gas storage distribution, trunk and branch pipeline length, and total emissions were presented. The results show that the natural gas storage distribution affiliated with the current pipeline route does not have the most optimal distribution and does not have the lowest carbon emission, while the geographical distribution of the cities is more influential for location selection.

Exploring linkage opportunities for China's emissions trading system under the Paris targets——EU-China and Japan-Korea-China cases

Linking emissions trading systems (ETSs) in developing and developed countries is expected to serve as an important cooperative approach for achieving the Paris Agreement targets. As one of the first developing countries leveraging ETS to achieve domestic climate targets, China's involvement will significantly impact the market-based cooperation landscape. This study investigates two prospective linkage options for China's ETS, including the linkage with the EU ETS and the linkage with Japan's and Korea's ETSs under three different emission reduction targets, and analyzes the emissions, energy and economic impacts of both full linkage and limited linkage on China and its linkage partners using a global general equilibrium model. We find that full linkage could bring the largest welfare gains for each participant, but it also causes a loss in international competitiveness of China's domestic sectors and impedes the deployment of renewable energy in China's linkage partners. With the strengthening of emission constrains, the adverse impacts of full linkage intensify. If a limit is set on the volume of permits trading, carbon price changes are more moderate in each participant and the adverse impacts on international competitiveness of China and on renewables development of its linkage partners are lessened, at the expense of reduced welfare gains. Therefore, national policy-makers have to strike a balance between welfare gains and other policy objectives when considering linking their emissions trading systems. A limited linkage is more politically feasible and can be established initially and the restrictions on partner's permits may be loosened over time as the balance between different policy objectives is achieved.

International trade, CO2 emissions, and re-examination of "Pollution Haven Hypothesis" in China.

We use input-output analysis and Levinson's structural decomposition method to measure China's CO2 emissions under the no-trade hypothesis, to calculate how international trade affects China's emissions. We also analyze the driving factors of the difference between hypothetical no-trade CO2 emissions and actual emissions and discuss the existence of "Pollution Haven Hypothesis" (PHH) in China. The results show that (1) from 2000 to 2017, the hypothetical no-trade CO2 emissions are 2.43-14.67% lower than actual emissions. The scale effect is the main cause of this difference, while the composition effect fluctuates and has little impact. (2) Although exports make other economies' CO2 emissions transfer to China, imports also help avoid China's emissions from some carbon-intensive sectors. (3) International trade has little impact on the cleanliness of China's industry composition. The no-trade industry composition is slightly cleaner than the actual one before 2010, after which trade improves the cleanliness of industry composition to a small extent. PHH is invalid for China in recent years, and results for most developing countries do not support PHH. (4) The relationship between no-trade effects and income per capita for all the economies does not also support PHH. Most economies reduce emissions, and their industry compositions are cleaner because of trade, regardless of their development degree. Trade will not severely influence China's future emission reduction, and improving the cleanliness of carbon-intensive sectors should be paid more attention to.

China's carbon emissions from the electricity sector: Spatial characteristics and interregional transfer.

As a major carbon emitter, the electricity sector is crucial to the realization of China's emission reduction objectives. Existing studies focus mostly on the influencing factors, emission efficiency and low carbon development of carbon emissions in the electricity sector. Missing from the literature is an analysis of spatial characteristics of carbon emissions and the embodied carbon emission transfer caused by the separation of electricity production and consumption, which is the basis for assigning the responsibility for emission reduction. Thirty provinces in China were taken as research objects, and Moran's I index was adopted to analyze the spatial characteristics of the electricity sector's carbon emissions and carbon emission intensity. Based on multiregional input-output tables, we compared the transfer situation of China's provincial electricity carbon emissions in 2010 and 2015. The results demonstrate that, from 2010 to 2015, the electricity carbon emissions in 20 provinces increased, whereas the carbon emission intensity in 21 provinces decreased. Carbon emissions and carbon emission intensity of electricity in most provinces demonstrate positive spatial clustering characteristics. The total amount of carbon emission transfer in the electricity sector increased from 421.22 million tons in 2010 to 581.369 million tons in 2015, the number of net transfers out of areas increased from 13 to 15, and the number of net transfers into areas decreased from 16 to 15. The active degree of carbon emission transfer reveals the eastern region > the central region > the western region. Different emission reduction policies should be formulated based on the difference in resource endowment between the north and south. Provinces that transferred out large amounts of electricity carbon emissions should take greater responsibility for emission reduction. Integr Environ Assess Manag 2022;18:258-273. © 2021 SETAC.

Shooting two hawks with one arrow: Could China's emission trading scheme promote green development efficiency and regional carbon equality?

China's carbon emission trading scheme (ETS) is an important market-based environmental regulation tool to achieve carbon neutrality targets. Numerous studies have identified the emission reduction and economic effects of the ETS, but quantitative evaluations of the ETS for regional carbon equality is rare. Based on provincial panel data and industrial enterprise panel data in China for the 1998–2017 period, this study explores whether China's ETS pilot policy brings the double dividends of green development efficiency and regional carbon equality by using the DID model and Malmquist-Luenberger (ML) index. The results show that the ETS significantly improves green development efficiency and regional carbon equality. The mechanism analysis further reveals that the ETS promotes regional carbon equality by improving green total factor productivity (GTFP) and reducing investments in carbon-intensive industries in the pilot provinces, confirming the Porter hypothesis and investment transfer effect. However, the mediating effect of carbon-intensive firm migration is statistically nonsignificant, which implies that the carbon pollution haven hypothesis may not be the reason for the improvement in regional carbon equality. In addition, heterogeneous effects exist under different degrees of command-and-control environmental regulation (CER) and across different regions. Finally, policy implications are highlighted with respect to establishing a unified national carbon emission trading market and exerting synergy between ETS and CER tools.

Could carbon emission control firms achieve an effective financing in the carbon market? A case study of China's emission trading scheme

This paper proposes a new prediction method incorporating a set of measuring models applicable to the financing efficiency of China's carbon market to quantify such market's maturity, trading risk coefficient, and financing income. Our theoretical analysis indicates that the price of carbon emission quota essentially affects the financing efficiency of carbon market. While a robust safeguard measure to obtain a respectable income from carbon market financing is the long-term average quota price exceeding the initial quota price. Empirical findings derived from China's emissions trading scheme pilots reveal that these pilots can be divided into the growth-oriented market (i.e. Guangdong whose financing capacity is always significant), the balance-oriented market (i.e. Shanghai and Hubei whose quota pricing mechanisms and the financing level of carbon markets both maturely develop), and the risk-oriented market (i.e. Beijing whose quota price runs at a high-level with an intense financing income volatility). It is therefore achieved that carbon market's maturity level and quota price volatility are both robustly explicable for different financing effects among these pilots. Our key findings show that expanding the coverage of quota trading parties, stabilizing carbon price, and promoting carbon asset management help to improve the financing efficiency of carbon market.

Spatiotemporal distribution of atmospheric polycyclic aromatic hydrocarbon emissions during 2013–2017 in mainland China

Following implementation of the most stringent clean air policy in China, the emissions of NOx, SO2, and fine particles have greatly reduced since 2013. However, the emissions of polycyclic aromatic hydrocarbons (PAHs), which are highly toxic pollutants, and their spatiotemporal changes remain unclear. In this study, a 0.05° × 0.05° gridded PAH emission inventory was developed for mainland China during 2013–2017. The results show that the total PAH emissions have decreased from 112.92 Gg in 2013 to 100.09 Gg in 2017, with the fastest declines in the industrial (17.32%) and residential/commercial (10.58%) sectors. However, the decline in the PAH emissions is smaller than that of the NOX and SO2 emissions. The average emission density of PAHs in mainland China in 2017 was 10.43 kg/km2. North and East China have the largest PAH emissions. The residential/commercial, industrial, and transportation sectors are the major emission sources, accounting for 48.59%, 29.26%, and 17.21%, respectively. Carcinogenic PAH emissions accounted for 7.49% in mainland China, higher than those of developed countries (5.73%) and the global average (6.19%). Differences in the energy structures lead to significant differences in the spatial distribution of PAH emissions in various sectors. From 2013 to 2017, the emissions declined in most Chinese regions. The emission density in East China decreased the most, reaching 3.39 kg/km2, followed by North China (2.91 kg/km2). The magnitude of the decline in the PAH emissions and reasons for the decline significantly differ in different regions. Particular attention must be paid to the limited decline (5.22%) in Northwest China over the study period. Although China's emission density has been declining, it is still significantly higher than the global average. Therefore, China must further reduce the PAH emissions through technological innovation and reductions of energy consumption and, thus, reduce the regional lung cancer risk.

The atmospheric concentrations and emissions of major halocarbons in China during 2009–2019

Due to the characteristics of ozone-depleting and high global warming potential, chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs) and hydrofluorocarbons (HFCs) have been restricted by the Montreal Protocol and its amendments over the world. Considering that China is one of the main contributors to the emission of halocarbons, a long-term atmospheric observation on major substances including CFC-11 (CCl3F), CFC-12 (CCl2F2), HCFC-22 (CHClF2), HCFC-141b (CH3CCl2F), HCFC-142b (CH3CClF2) and HFC-134a (CH2FCF3) was conducted in five cities (Beijing, Hangzhou, Guangzhou, Lanzhou and Chengdu) of China during 2009–2019. The atmospheric concentrations of CFC-11, CFC-12, HCFC-141b and HCFC-142b all showed declining trends on the whole while those of HCFC-22 and HFC-134a were opposite. A paired sample t-test showed that the ambient mixing ratios of HCFC-22 and HFC-134a in cities were 41.9% and 25.7% higher on average than those in suburban areas, respectively, while the other substances did not show significant regional differences. The annual emissions of halocarbons were calculated using an interspecies correlation method and the results were generally consistent with the published estimates. Discrepancies between bottom-up inventories and the estimates in this study for CFCs emissions were found. Among the most consumed ozone depleting substances (ODSs) in China, CFCs accounted for 75.1% of the ozone depletion potential (ODP)-weighted emissions while HCFCs contributed a larger proportion (58.6%) of CO2-equivalent emissions in 2019. China's emissions of HCFC-141b and HCFC-142b contributed the most to the global emission (17.8%–48.0%). The elimination of HCFCs in China will have a crucial impact on the HCFCs phase-out in the world.

How can national ETS affect carbon emissions and abatement costs? Evidence from the dual goals proposed by China's NDCs

China has committed to goals of reducing its carbon intensity by 60%–65% in 2030 above the 2005 levels and peaking its carbon emissions by latest 2030. While a unified national emission trading scheme (ETS) has been recognized as the crucial instrument to fulfill these ambitious dual goals, its potential performance remains underexplored. This paper quantifies China's need for emission reduction under the dual goals in 2030 by setting three scenarios for peak emissions. Four initial allocation schemes of carbon emission allowance (CEA) are compared according to the emission abatement costs (EACs) of China and its 30 provinces. By estimating the provincial marginal abatement cost curves, China's ETS is simulated through a nonlinear programming aimed at minimizing its total EACs. We find that in achieving the dual goals it makes economic sense to operationalize the ETS that would reduce China's EACs by 61.41%–80.33% in 2016–2030, at a carbon price of 394.55–425.75 RMB per ton CO2. Peaking China's emissions in 2030 is the preferred choice that will trigger the largest GDP in 2016–2030. The historical responsibility scheme is recommended for the CEA allocation because of the lowest initial EACs without ETS. To allow more room for economic growth after China peaks emissions, there is a need for overfulfilling the goal of carbon intensity reduction by 2030, which is consistent with China's latest climate mitigation targets. This research not only highlights the role of ETS in realizing China's dual goals, but provides a scientific framework for evaluating the environmental policies towards multiple goals in a cost-effective manner.

Has Carbon Emissions Trading Reduced PM2.5 in China?

China today has an urgent need to develop low-carbon policies that also address local air pollution. This study uses a difference-in-differences model to estimate the extent to which China's Emissions Trading Scheme (ETS), which directly addresses CO2 emissions, has also generated cobenefits by reducing PM2.5. Using monthly PM2.5 concentration and weather data for 297 Chinese cities from January 2005 to December 2017, we find that (1) China's ETS has reduced PM2.5 concentrations by 4.8%, and this reduction effect is strongest in summer. The results are confirmed by robustness tests including propensity score matching, mahalanobis distance matching, two placebo tests, and controlling atmospheric policies. (2) The ETS pilots have positive spillovers on neighboring nonpilot cities within 300 km of the pilot cites, especially for those downwind neighboring nonpilot cities, and the ETS's cobenefits are primarily a result of firms adopting abatement activities and adjusting industrial structure. (3) The cobenefits of China's ETS pilots are greater in regions with larger carbon trading volume and higher carbon trading price. (4) The reduction in PM2.5 concentration caused by China's ETS may have avoided 23,363 deaths and saved $41.38 billion annually in GDP.

Quantifying the implied risk for newly-built coal plant to become stranded asset by carbon pricing

With carbon pricing being implemented, current investment in carbon-intensive energy infrastructure will be exposed to carbon pricing risk, and some may even become stranded assets. In this work we build a real options-based model to quantify the implied risk for newly-built coal plants to become stranded assets by carbon pricing, and focus on the case of China, which is heavily relying on coal power and is introducing a nation-wide carbon market, to make a case study. The probability distribution over time for coal plant to become stranded is obtained, and the expected lifespan of newly-built plant is estimated in carbon pricing scenarios. Our results show that carbon pricing will increase the risk for coal plants to become stranded assets and the plant lifespan will be shortened accordingly. Moreover, higher carbon price and auction ratio of carbon permits will lead to higher stranding risk. Specially, in the case of full auction of carbon permits, with the average carbon price of 50 CNY/tCO2 observed in China's emission trading pilots being introduced, the expected lifespan is shortened by 3 years; further with the carbon price reaching 100CNY/tCO2, the expected lifespan is shortened by 10 years. Thus the implied risk of coal plants' becoming stranded assets by carbon pricing should be incorporated into the investment evaluation, to avoid making myopic and even wrong decision.

How would an emissions trading scheme affect provincial economies in China: Insights from a computable general equilibrium model

This paper analyzes the economic impacts of a national emissions trading scheme in 31 Chinese provinces. The emissions trading system is assumed to accomplish China's emissions reduction targets set under the Paris Climate Agreement. A multi-regional, multi-sectoral, recursive-dynamic computable general equilibrium model is developed for the analysis. The results show that the emissions trading scheme would reduce provincial CO2 emissions by 4%–22% relative to the baseline levels in 2030. It would cause the provincial GDP to change from −4.6% to 1.8% relative to the 2030 baseline levels. The magnitudes of the impacts on provincial economies and CO2 emissions are sensitive to initial emissions allocation rules. Some provinces that face GDP loss under one rule of emissions allocation would experience GDP gains under the other rules, and vice versa. However, emissions-intensive provincial economies—Neimenggu, Ningxia, Shanxi, and Shaanxi—are found to experience higher GDP loss irrespective of the allowance allocation rules. Meanwhile, Fujian, Guangdong, Guangxi, and Liaoning are found to experience higher GDP under all the rules of allowances allocation.