Emissions Cap Research Articles

VOC emission caps constrained by air quality targets based on response surface model: A case study in the Pearl River Delta Region, China

Because of the recent growth in ground-level ozone and increased emission of volatile organic compounds (VOCs), VOC emission control has become a major concern in China. In response, emission caps to control VOC have been stipulated in recent policies, but few of them were constrained by the co-control target of PM2.5 and ozone, and discussed the factor that influence the emission cap formulation. Herein, we proposed a framework for quantification of VOC emission caps constrained by targets for PM2.5 and ozone via a new response surface modeling (RSM) technique, achieving 50% computational cost savings of the quantification. In the Pearl River Delta (PRD) region, the VOC emission caps constrained by air quality targets varied greatly with the NOx emission reduction level. If control measures in the surrounding areas of the PRD region were not considered, there could be two feasible strategies for VOC emission caps to meet air quality targets (160 µg/m3 for the maximum 8-hr-average 90th-percentile (MDA8-90%) ozone and 25 µg/m3 for the annual average of PM2.5): a moderate VOC emission cap with <20% NOx emission reductions or a notable VOC emission cap with >60% NOx emission reductions. If the ozone concentration target were reduced to 155 µg/m3, deep NOx emission reductions is the only feasible ozone control measure in PRD. Optimization of seasonal VOC emission caps based on the Monte Carlo simulation could allow us to gain higher ozone benefits or greater VOC emission reductions. If VOC emissions were further reduced in autumn, MDA8-90% ozone could be lowered by 0.3-1.5 µg/m3, equaling the ozone benefits of 10% VOC emission reduction measures. The method for VOC emission cap quantification and optimization proposed in this study could provide scientific guidance for coordinated control of regional PM2.5 and O3 pollution in China.

Integration of non-energy among the end-use demands of bottom-up whole-energy system models

The complexity of bottom-up energy system models has progressively grown to enhance the representativeness of the system under analysis. Among them, whole-energy system models aim at representing the energy resources, conversion technologies, and energy demands of regions (i.e., a country) in its entirety. Despite this effort leading to an increased number of conversion processes modeled, the typologies of the end-use demand have remained limited to three categories: electricity, heat, and transportation. A fourth category, herein addressed as the non-energy demand, has widely been neglected. Being associated with the production of chemicals (i.e., plastics and fertilizers), the non-energy demand represents 10% of the world’s total end-use demand. Its relevance becomes fundamental in analyses that define the optimal defossilization pathways of energy systems with high dependence on fossil resources. This contribution introduces a schematic representation of the conversion processes involved in the satisfaction of the non-energy demand. Through its implementation in a bottom-up whole-energy system model, it evaluates the impact of this additional end-use in the configuration of the optimal energy system. In this study, the Belgian energy system, characterized by a penetration of the chemical and the petrochemical industries up to 20% of its total end-use demand, is taken as a reference case. The transition to a defossilized energy system is enforced through a snapshot analysis with a progressively more restrictive emissions cap. The results emphasize the role of renewable carriers (i.e., methanol and ammonia) in the defossilization of the energy system, otherwise hindered when the non-energy demand is neglected. The 100% import of these carriers at the lowest emissions cap highlights the potential dependence of the country under analysis, with limited availability of renewable resources, from countries exporting renewable methanol and ammonia.

Carbon neutral sustainability and green development during energy consumption

Carbon emission is one of the major problems during energy consumption. Many countries are trying to reduce it with a focus on carbon neutrality. Bridging this gap, we considered energy consumption in the monopoly market. In this research, the CO2 emissions problem has been solved considering the trilogy of carbon neutrality decisions. A mathematical model was developed based on the monopoly market. After that, this mathematical model was incorporated into the simulation model. The design of the experimental method was performed to achieve the optimal decision for the carbon-neutral trilogy. We found that Green innovation fund on carbon-based energy consumption (GIFCBER), CO2 emission tax on carbon-based energy consumption (TECBER), and Emission cap on carbon-based energy consumption (ECBER) are useful to reduce CO2 emissions to move towards the goal of carbon neutrality in a monopoly market. ECBER allows a manufacturer to produce more as compared to GIFCBER and TECBER. But, the TECBER strategy will enable manufacturers to produce fewer goods than the ECBER strategy. This research contributes as a reference and inspiration to achieve carbon neutrality during energy consumption. It helps the government's policymakers find the optimal levels and decisions of carbon neutrality factors to decrease CO2 emissions. Moreover, it allows manufacturers to maximize profit and create a clean environment.

Energy trade-offs in coupled ICM and electricity market under dynamic carbon emission intensity

With the adoption of the cap-based carbon market (CCM), a growth-limiting dilemma from the industrial growth and emission cap reduction has emerged, making it unsuitable for developing countries under rapid industrialization. In contrast, the intensity-based carbon market (ICM) provides a promising option targeting carbon emission intensity (CEI) reduction. However, due to the complexity of correlations between the ICM and electricity market (EM), the resulting energy trade-offs have not been investigated clearly. Thus, this paper quantifies the impact of market correlations on energy trade-offs under the dynamic CEI. Firstly, the CEI dynamic is proved and modeled as an inversely proportional function to the power output. Then, a stochastic EM clearing model for energy trade-offs restricted by ICM obligations and renewable uncertainties is designed. Since the model is a mixed-integer nonlinear problem with multiple scenarios, it is then reformulated and solved by the Generalized Benders Decomposition method. Finally, the proposed method is demonstrated on the IEEE 14- and 118-bus systems. The results show that the ICM effectiveness is dependent on CEI benchmarks and carbon prices, and the ignorance of the CEI dynamic can lead to the miscalculation of carbon emissions and sector profits.

Knappes Gas – Optionen zur Verringerung der Deckungslücke in Deutschland

Abstract In this article, we provide the results of a simple quantitative analysis of the potential remedies to reduce the supply gap in Germany that arises if Russia stops delivering natural gas. We take into account the supply potential of other suppliers, and combine this with an analysis of the additional supply potential by stopping electricity generation from natural gas. Moreover, we investigate the effect of minimum storage requirements. We find that a realistic expansion of supply by other providers, in particular Norway, combined with the temporary replacement of gas-fired power plants by coal-fired power plants and expansive storage filling to 90 % of storage capacity strongly reduces the winter supply gap. In summer months, the supply gap is even negative, indicating the potential to store even more for the winter. In other words, most of the natural gas consumption can be maintained even if Russia fails to supply to Germany. It is important that the temporary replacement of gas-fired power plants by coal-fired power plants is not accompanied by an expansion of the CO2 emission cap, in order to ensure emission neutrality of the measure. If the expansion of renewable generation capacities proceeds as planned in the German government’s „Easter Package“ of spring 2022, the increased use of coal-fired power plants can be temporary and the coal exit in 2030 can be maintained.

Tax haven, pollution haven or both?

This paper studies the interplay between two groups of countries, large and small, which compete sequentially on corporate taxes and environmental regulations to attract imperfectly mobile firms. We show that in general, the small countries undercut the large countries in terms of corporate taxes. The small countries choose to be both tax and pollution havens when they are less concerned about the environment than the large countries are and capital integration is low. The large countries never act as both tax havens and pollution havens. Finally, we find that higher firm mobility narrows the tax gap between the large and the small countries but does not affect the optimal environmental policy: tax competition immunizes countries against the detrimental effect of globalization on emission caps.

Causal effects of the Tokyo emissions trading scheme on energy consumption and economic performance

The Tokyo emissions trading scheme (ETS) is the first regional ETS in Japan, where a national ETS has not been introduced. In this study, we estimate the policy impacts of the Tokyo ETS on energy usage and economic activities during the scheme’s first phase (2010–2014) and the first four years of its second phase (2015–2018) using business establishment-level panel data from 2007 to 2018. From the matching-based difference-in-differences (DID) estimation results, we find that while regulated business establishments reduced their energy usage beyond their reduction targets set by ETS regulation, the unregulated business establishments chosen by the matching strategy as a comparison group also decreased their energy usage to the same extent. Additionally, the Tokyo ETS did not have a negative impact on the economic activities of regulated business establishments during phases I and II. These results suggest that the emissions cap levels in each phase may not have been sufficiently demanding to induce regulated business establishments to implement additional energy use reduction practices.

Impacts of green and preservation technology investments on a sustainable EPQ model during COVID-19 pandemic

Carbon and Sulfur dioxides emissions are the key issues of global warming that affects on human health. Emissions cap- and -trade policy is a key mechanism implemented in several countries to reduce the emissions. Nowadays, public gathering is restricted due to the pandemic situation caused by COVID-19. As a result, people are facing huge problems in their regular activities and lifestyle. During the lockdown periods, demands for few merchandises decrease and the deterioration rate increases. Moreover, because of the unavailability of raw materials and labours during the lockdown, shortages occur at the manufacturing company. Keeping these problems in mind, a multi-objective sustainable economic production quantity model is proposed with partially back-ordering shortages, in which the effects of sustainability are investigated. To handle the demand fluctuation throughout the current pandemic, emergency level dependent demand rate is assumed. To reduce greenhouse gases emissions and deterioration rate, investments in green technology and preservation technology efforts are used. The objectives of this study are to maximize the manufacturer’s profit and minimize the greenhouse gases emissions for producing green products. The multi-objective model is solved by utilizing the fuzzy goal programming approach. The mathematical model is illustrated by four numerical examples. The main finding of the work is that under both green and preservation technologies investments, a sustainable model with partially back-ordering shortages and lockdown level dependent demand rate decreases justifiable greenhouse gases emissions and increases the product’s greening level. The results indicate that the system profit is increased by 16.1% by investing in both preservation and green technology. Furthermore, a sensitivity analysis is performed along with some managerial insights for practitioners. Finally, the paper is ended with conclusions and future research tips.

Emission trading, induced innovation and firm performance

Whether or not carbon emission policies can achieve the “double dividend” of carbon reduction and economic growth is vital for realizing sustainable development. This paper investigates whether a market-based carbon emissions trading scheme (ETS) can stimulate firm innovation and further achieve a win-win situation for environmental and economic performance. Based on panel data for listed firms from 2006 to 2017, we use a difference-in-differences model to investigate the effects of China's ETS pilot policy. The results show that first, the pilot ETS is related positively to firm environmental and economic performance and performs better in areas with more stringent emissions caps, and second, that the pilot ETS is positively correlated with firm innovation. Moreover, further analysis shows that innovation induced by the ETS significantly improves firm environmental and economic performance. These findings suggest that imposition of an ETS which induces innovation could achieve a win-win situation for environmental and economic performance and provides direct empirical evidence supporting the Porter hypothesis.

Building China’s National Carbon Market That Serves Carbon Peaking and Carbon Neutrality Goals

This paper summarizes the new progress in building China’s national carbon market since 2020, and analyzes the connotation of China’s carbon peaking and carbon neutrality goals (“dual carbon” goals) and its significance to socio-economic development in China. Through case analysis, this paper expounds the role of China’s recent carbon trading activities in promoting the transition toward green and low-carbon socio-economic development. On that basis, this paper conceives a top-level design for building the national carbon market that serves the “dual carbon” goals: building and improving the national carbon market that fundamentally serves as an emission reduction tool, developing the institutions and systems of the national carbon market with a focus on emission cap, creating a multilevel and diversified carbon trading scheme centered on the national carbon market, exploring a mechanism that takes carbon emission reduction as the core and promotes the synergistic effect of the carbon market with other environmental rights trading markets, and pursuing the healthy and orderly development of carbon finance that aims to serve carbon emission reduction.

Carbon-Oriented Expansion Planning of Integrated Electricity-Natural Gas Systems With EV Fast-Charging Stations

Under the pressure of climate change and the energy crisis, electric vehicles (EVs) have experienced a marked growth in many countries recently. However, the environmental benefits of EVs cannot be achieved if the charging power from the electricity grid is still mainly provided by fossil-fueled power plants. How to construct a low-carbon fast-charging system has become an emerging research topic. In this context, a novel carbon-oriented expansion planning model of the integrated electricity and natural gas system (IEGS) with EV fast-charging stations (FCSs) is proposed to determine the optimal alternatives, locations, and sizes for ecofriendly candidate assets, including roof-top photovoltaic (PV) panels and fuel cell (FC) units in each FCS, as well as renewable energy units and carbon capture and storage (CCS) systems in IEGS. To guarantee the carbon reduction performance of the planning scheme, the carbon emission cap of the EV charging system is specified by the planner and optimally allocated among multiple FCSs according to their carbon reduction abilities. Furthermore, the proposed model can not only consider the initial investment and operation costs but also take into account the expected adaptation cost to future scenarios that are generated in line with three uncertainties, namely, the traffic flow levels, conventional load levels, and renewable-based power generation levels. Finally, the proposed expansion planning method is illustrated by conducting numerical experiments in case studies.

Price-Responsive Allowance Supply in Emissions Markets

Environmental policy with uncertainty is often posed as a choice between price and quantity instruments. Adding flexibility to fixed policy instruments can improve outcomes. Roberts and Spence noted the efficiency advantages of matching emissions allowances supply to the marginal damage schedule. We propose an implementable approach to making that match, an approach we call “price-responsive supply,” which treats prices and quantities as simultaneously determined in the allowance auction. For competitive environments, price-responsive supply outperforms fixed-price and fixed-quantity instruments. Price-responsive supply can enhance the performance of real-world regulatory environments through an automatic adjustment mechanism that responds instantaneously to new information about abatement costs. We demonstrate the improved performance of price-responsive supply in experiments and simulations. A price-responsive supply schedule, while offering efficiency advantages, also translates the cost-lowering effects of other, coincident policies into accelerated reductions under an emissions cap, thereby helping to resolve the waterbed effect.

한국 전력시장에서 실시간 시장가격 제도가 소비자 잉여에 미치는 영향에 관한 연구

Real-time pricing of electricity ensures that market equilibrium is achieved by both consumers and generators. In this study, the effect of real-time pricing on consumer surplus was analyzed in the context of Korean electricity markets by using the model proposed by Borenstein and Holland[3]. In addition, the authors analyzed the impact of emission cap on consumer surplus. Real-time pricing was shown to affect the composition of generation capacities. It increased the change in consumer surplus up to 7.12% compared to the reference electricity bill. When the cap of 95% of the reference emission was applied, the change in consumer surplus decreased on average by 0.58%. In the study, it is suggested that the implementation of real-time pricing and the investment to increase the price elasticity are necessary to improve consumer surplus.

Raising climate ambition in emissions trading systems: The case of the EU ETS and the 2021 review

We provide a quantitative assessment of policy options to inform the 2021 review of the EU Emissions Trading System (ETS) and raise climate ambition. We use a permit trading model in which firms utilize rolling finite planning horizons, which replicates historical price and banking developments well compared to an infinite horizon. When firms have bounded foresight, indirectly raising ambition through the Market Stability Reserve (MSR) is not equivalent to directly raising ambition through the emissions cap trajectory. Leveraging the MSR turns out to be efficiency improving as it compensates for firms’ bounded foresight by frontloading abatement efforts. We analyze the MSR interaction with the cap trajectory to exploit synergies and minimize the cost of raising ambition. We also provide a comparative assessment of a complete suite of changes in the MSR parameters. Whatever its parameters, MSR-induced resilience to demand shocks remains limited by design: the MSR acts more as an unconditional price support provider than as a responsive price stabilizer.

STRICTs: A Blockchain-enabled Smart Emission Cap Restrictive and Carbon Permit Trading System

As the first legally binding global agreement on climate change, the Paris Agreement aims to limit long-term global warming to less than 2 °C, preferably below 1.5 °C compared to pre-industrial levels. Road transport, as one of the primary sources of energy consumption and carbon emissions, has great potential for energy conservation and emission reduction in achieving the climate goals. However, current approaches cannot efficiently reduce road travel, making it challenging to decarbonize in the transport sector. Therefore, in this paper, we propose STRICTs, a blockchain-enabled motor vehicle restrictive and trading system based on the carbon emissions cap. STRICTs allows automated carbon emission auditing and carbon emission violation punishment without relying on third-party escrow. Through a decentralized enforcer, STRICTs also enables carbon permit trading reliably and transparently. Finally, we implement a proof-of-concept prototype of the system based on Hyperledger Fabric and conduct experiments for comprehensive performance evaluation through CO2 Emission by Vehicles dataset. The experiment results show the practically affordable performance of STRICTs.

Has the inter-regional transmission expansion promoted the low-carbon transition of China’s power sector?

China is facing unprecedented pressure to reduce carbon emissions than ever before. Significant differences do exist among regions in resource endowment, emission potential and environmental capacity. The introduction of inter-regional transmission lines is of great significance in alleviating environmental pressure and regulating the power mix. However, it is uncertain whether and to what extent the electricity sector has been locked into fossil fuel, as well as the regional differences in low-carbon transition. This study investigates whether the transmission grid expansion represented by more ultra-high voltage (UHV) lines construction will mitigate carbon emissions through a mixed complementarity problems equilibrium analysis. Through simulating the influence of various carbon emission caps on inter-regional transmission lines, it explores the regional differences in low-carbon transition in the power sector, and investigates the regions’ reliance on fossil-fuel from the perspective of carbon lock-in. We propose the following suggestions: (1) Mitigating the reliance on fossil fuel-fired power may relieve the low-carbon transition pressures of the central, eastern, and southern regions; (2) The inter-regional transmission lines help to regulate the distribution of carbon emissions by adjusting emission cost; and (3) The effect of the inter-regional transmission lines on mitigating the carbon lock-in of regional power sector will be weakened when facing a tight carbon emission cap.

Evaluating race-to-the-top/bottom hypothesis in high-income countries: controlling emissions cap trading, inbound FDI, renewable energy demand, and trade openness.

The massive rise in the world's average temperature has created major economic and environmental issues that must be addressed by strict environmental legislation. Carbon pricing is seen as a sustainable instrument capable of assisting in the reduction of negative environmental externalities associated with global carbon emissions. The race-to-the-bottom (RTB) hypothesis describes a competitive environment in which economies sacrifice environmental quality standards to undercut competitors, thus undermining the ecological sustainability objective. The study contributed to the evaluation of the RTB hypothesis by examining the role of emissions cap trading instruments in conjunction with inbound foreign direct investment, economic growth, renewable energy demand, and trade openness in reducing carbon emissions, using aggregated data from high-income countries from 1975 to 2019. The linear and non-linear ARDL estimator is used for empirical analysis. The results show that emissions cap trading lowers carbon emissions in the long run while increasing in the short run. Inbound FDI confirmed the "pollution halo hypothesis" in the long run while verifying the "pollution haven hypothesis" in the short run. The per capita income and its associated positive shocks substantially decrease carbon emissions in the short and long runs. Renewable energy demand and trade openness increases carbon emissions in the short and long runs, respectively. On the other hand, trade openness decreases carbon emissions in the short run. The results confirmed the RTB hypothesis in the short run. At the same time, it substantiates the "race-to-the top" (RTT) in the long run, by imposing stringent environmental policies to the way forward towards green and clean development. The study concludes that emissions cap trading and investment in cleaner technologies played a decisive role in reducing environmental pollution. As a result, it is desired to make environmental regulations more environmentally friendly by adopting carbon pricing and technology transfer that will lower the average world temperature.

Modeling Integrated Power and Transportation Systems: Impacts of Power-to-Gas on the Deep Decarbonization

The deployment of renewable energy sources, power-to-gas (P2G) systems, and zero-emission vehicles provide a synergistic opportunity to accelerate the decarbonization of both power and transportation system. This article investigates the prospects of implementing hydrogen P2G technology in coupling the power system and the transportation system. A novel coordinated long-term planning model of integrated power and transportation system (IPTS) at the regional scale is proposed to simulate the power system balance and travel demand balance simultaneously, while subject to a series of constraints, such as CO2 emission constraints. IPTS of Texas was investigated considering various CO2 emission cap scenarios. Results show unique decarbonization trajectories of the proposed coordinated planning model, in which IPTS prefers to decarbonizing the power sector firstly. When the power system reaches ultralow carbon intensity, the IPTS then focuses on the road transportation system decarbonization. The results show that with the P2G system, IPTS of Texas could achieve 100% CO2 emission reductions (relative 2018 emissions level) by adding a combination of approximately 143.5 GW of wind, 50 GW of solar PV, and 40 GW of P2G systems with 2.5% renewables curtailment. The integration of the P2G system can produce hydrogen by use of surplus RES generation to meet hydrogen demand of Fuel cell electric vehicles (FCEVs) and to meet multiday electricity supply imbalances.

Development of non-deterministic energy-water-carbon nexus planning model: A case study of Shanghai, China

Energy, water and carbon are closely intertwined. The conflicts among increasing energy demand, declining water resource and tightening emission target have put tremendous pressures on the regional sustainable development, particularly for the metropolitan areas. This study aims at developing an integrated modelling system for supporting the energy-water-carbon nexus system planning in Shanghai. A variety of policy scenarios associated with carbon emission cap and renewable power ratio under multiple uncertainties are examined. To deal with uncertainties expressed as interval values and probability distributions in the nexus system, a mixed-integer interval chance-constrained two-stage stochastic programming method is developed. The obtained results disclose that the electricity generation scheme and the power mix would gradually transit from a high water-intensity and fossil-fuel dominated structure to a low water-intensity and renewable-energy based one over the planning period (2021–2035). Compared with the business-as-usual scenario, peak carbon emissions would decrease by [5.48, 9.26] × 106t under introduction of the emission cap constraint. These findings would address the issue of the tradeoff between economic objective and system sustainability, and thus provide reasonable insights into the coordinated planning and management of the energy-water-carbon nexus system.

Optimal allocation and transaction of waste load permits for transboundary basin: A Bi-level programming approach based on node-arc

Inadequate water quality exacerbates global water resources scarcity. Hence, water quality of the river basin is increasingly perceived as a global obstacle to sustainable development because of the limited water carrying capacity. Efficient waste load permits (WLPs) allocation plays a critical role in enhancing water quality by controlling the emission cap. Considering transboundary water pollution and transaction among regions, a bi-level objective model is proposed to analyze the WLPs allocation based on the node-arc method. Motivated by alleviating regional development differences, the watershed management committee concentrates on equitable distribution of WLPs to regions. Furthermore, regional authorities focus on how to guarantee the maximum economic development and balance the WLPs emissions from the municipal, industrial, and agricultural sectors. Practicality and efficiency of the constructed model is demonstrated by applying it to Tuojiang River Basin. Through the analysis of the results, three management recommendations are proposed for Tuojiang River: strengthening the prevention of agricultural non-point source pollution, sticking to the cooperation between upstream and downstream regions, and speeding up the construction of sewage environmental tax system. The results illustrate that as the proposed method can control the total amount of sewage, it could provide decision-making references for the amelioration of water environment.