Low Carbon Prices Research Articles

Forest carbon payments: A multidisciplinary review of policy options for promoting carbon storage in EU member states

Forest carbon sinks can play an important role in mitigating climate change, but currently only a few policies exist globally where economic incentives are created for forest owners to maintain and strengthen sinks. This article aims to facilitate the design and implementation of governmental payment schemes for forest carbon uptake services by presenting a multidisciplinary analysis of the many challenges involved in such schemes and by proposing potential solutions. We assess the consequences, opportunities, and risks of carbon payment schemes from economic, ecological, social, and legal points of view based on existing literature. Our analysis is set in the context of the European Union (EU), but many of the central findings have relevance for a broader geographical area. The main economic challenges of implementing carbon payment schemes relate to potential leakage, the question of additionality, and uncertain forest-owner behavior. The most important ecological considerations include effects on soil carbon dynamics and biodiversity as well as issues of non-permanence and forest resilience. Our exploration of the social acceptance of carbon payments among the general public, key market actors such as forest owners and forest industry, and other stakeholders suggest that both the process of developing the scheme and its details are significant. Further, our legal analysis indicates that central challenges for carbon payment schemes within the EU rise from the requirement to comply with competition and state aid regulations. Finally, we synthesize our findings and suggest a two-step approach for introducing public carbon payments in an EU member state. Initially, the scheme could be launched via De minimis aid or the new aid scheme (GAFSRA). A low carbon price could be applied to moderate market effects, and the payments could be limited to additional carbon storage only. Peatlands, where tradeoffs exist between tree biomass carbon and soil carbon, should initially be excluded from the standard payment scheme, and regulated with command-and-control instruments and measure-based payments instead. In the future, an improved knowledge base and institutional changes may enable schemes that encompass all ecosystem carbon pools on all relevant soil types and create optimal incentives for both forest management and land-use choices by pricing all land-based sinks and emissions. Such schemes could utilize, e.g., cap-and-trade instruments and be complemented by import tariffs to control carbon leakage.

No pain, no gain? Simulation of carbon reduction potential and socioeconomic effects of voluntary carbon trading in China during 2021–2060

Voluntary carbon market has become a key mechanism of stimulating carbon emission mitigation actions globally. In this study, we calculate the emission reduction potential of Carbon Generalized System of Preferences (CGSP), a dominated voluntary carbon trading mechanism in China, including on-going projects of forestry carbon sinks, waste clothes reuse, installation of distributed photovoltaic power generation system, and usage of energy-conserving devices, as well as other extended methods for their future mitigation potentials. We employ a computable general equilibrium model to delve into the effects of CGSP mechanism on carbon price, economic growth and household consumption, assessing its impact on the equitability of social welfares between urban and rural residents during 2021–2060. Our results indicate that employing the current methods for CGSP would lead to around 5.0 Mt CO2 reduction annually. since 2018, whereas adopting the extended methods would yield reductions of 157.1 Mt. Promoting forestry carbon sinks and energy-conserving appliances offers the most prominent emission reduction, while low-carbon travel shows the biggest potential going forward. CGSP will loosen carbon constraints on industries in the market and result in a lower carbon price, reducing the economic cost of carbon trading without compromising China's carbon peaking and carbon neutrality goals. Supplementing CGSP could reduce the GDP loss by up to 0.2 trillion Yuan by 2030 and 0.9 trillion Yuan by 2060, compared to the sole operation of compliance carbon trading market. Provided fiscal stimulus policies, CGSP will further reduce GDP loss by 1.1 trillion Yuan in 2060. Different fiscal stimulus scenarios have a strong implication on welfares of urban and rural residents, wherein monetary equivalent incentive will reduce urban-rural income gap by up to 718 Yuan/capita in 2060.

The geography of avoided deforestation and sustainable forest management offsets: the enduring question of additionality

ABSTRACT Avoided deforestation and sustainable forest management (AD/SFM) offset projects have developed piecemeal, lacking consensus standards and receiving only quite low carbon prices. The diverse forces project developers face have led to a complex geography of different offsetting standards and funding sources adopted by various projects. Combining and updating existing AD/SFM pilot project databases, we produce – to our knowledge – the largest publicly available dataset of such projects’ approximate locations, containing nearly 800 worldwide. Using Cox proportional hazards models, we analyze the geography of these AD/SFM offset projects to understand better how different pressures project developers face in this weakly consolidated field have shaped where projects are more and less likely to be undertaken. We find that, at a fifty-kilometre-per-side hexagonal resolution, both AD/SFM projects tend to be located in areas with high above-ground biomass and high IUCN Red List species richness. Additionally, AD projects tend to be located in areas with stronger deforestation drivers. There is also a clear geographic specialization, with over 85% of the SFM projects in our dataset located in the United States. In contrast, AD projects have generally been established in countries that have engaged with the United Nations Reducing Emissions from Deforestation and Forest Degradation (UN-REDD) Programme or the World Bank’s Forest Carbon Partnership Facility. While AD/SFM projects may not be avoiding emissions at levels estimated in existing offset systems, they might still have a role to play in climate and habitat protection.

Biochar as a carbon dioxide removal strategy in integrated long-run mitigation scenarios

Limiting global warming to under 2 °C would require stringent mitigation and likely additional carbon dioxide removal (CDR) to compensate for otherwise unabated emissions. Because of its technology readiness, relatively low cost, and potential co-benefits, the application of biochar to soils could be an effective CDR strategy. We use the Global Change Analysis Model, a global multisector model, to analyze biochar deployment in the context of energy system uses of biomass with CDR under different carbon price trajectories. We find that biochar can create an annual sink of up to 2.8 GtCO2 per year, reducing global mean temperature increases by an additional 0.5%–1.8% across scenarios by 2100 for a given carbon price path. In our scenarios, biochar’s deployment is dependent on potential crop yield gains and application rates, and the competition for resources with other CDR measures. We find that biochar can serve as a competitive CDR strategy, especially at lower carbon prices when bioenergy with carbon capture and storage is not yet economical.

Diffusion of “dual carbon” policies among Chinese cities: A network evolution analysis

Numerous regions across China have introduced “dual carbon” policies, yet the response of cities to these policies remains unclear. In this study, we used emission data from 271 Chinese cities for the years 2010, 2015, and 2020 to construct a complex network of urban carbon emissions with a modified gravity model. To further investigate the drivers of the “dual carbon” policy diffusion, we conducted a simulation of network evolution under the two policy diffusion mechanisms of coercion and learning. Our findings indicate that the “dual carbon” policy exhibits a network diffusion effect, with cost-effectiveness serve as a critical factor influencing its spread. And the China's low carbon price lacks incentives for reduction, carbon pricing needs to be increased and differentiated emission reduction incentives, penalties for over-emission, and carbon quotas based on the type of decoupling of the city need to be introduced to facilitate the diffusion of policies. Additionally, through counterfactual scenario analysis and an exploration of network structural characteristics, we highlighted the vital role of cities with high betweenness centrality within urban agglomerations in facilitating efficient policy diffusion. This study also offers a process for selecting pilot cities, providing a valuable reference for future policy initiatives.

Does the South African Carbon Tax Incentivise Mines to Invest in Solar Photovoltaic?

The aim of this study was to evaluate the adequacy of South Africa’s carbon pricing policy in incentivising adoption of Solar photovoltaic in South African mines. A qualitative study was conducted to evaluate the adequacy of South Africa’s carbon tax policy design to encourage adoption of solar photovoltaic in mines. The study further establishes the carbon pricing level that will induce South African miners to invest in Solar photovoltaic through a net present value simulation. A review of South Africa’s Carbon Tax regime highlights that the policy shortcomings can be attributable to low carbon prices, excessive free emission allowances, and continued subsidy support of fossil fuels. Furthermore, the carbon price needs to exceed cost of abatement to encourage investment in decarbonisation measures. A net present value simulation finds that a carbon price of ZAR 668.62 per tonne of CO2 would need to be levied to incentivise mining entities to invest in solar photovoltaic. The study recommends higher carbon prices be levied for carbon for emissions to encourage mining entities to adopt solar photovoltaic renewable energy. The paper contributes to tax policy scholarship on designing a carbon pricing model for South Africa’s mining sector. Decarbonising the mining industry, a significant contributor of GHG emissions, will advance the decarbonisation efforts of South Africa.

Impact of carbon pricing on the integrated green supply chain of the semiconductor industry

To better respond to the strategic goals of "carbon peaking" and "carbon neutrality,” businesses are collaborating with suppliers and customers to jointly promote green and environmentally friendly practices to increase economic benefits, enhance social reputation, and improve environmental competitiveness while achieving environmental performance. Currently, some theoretical achievements in the field of green supply chain integration have been made. Nevertheless, systematic retrospective research needs to be improved to help us fully understand the status of research in China and elsewhere. Therefore, this article analyzed the concept of green supply chain integration using eight years of data (from 2014 to 2021) from a small and medium-sized environmental company1 and divided the concept into four systems: the water cycle system (H2O), renewable energy system (CaCl2), carbon peak system (CO2), and carbon-neutral system (CO2). These four systems were analyzed with regard to internal green integration, green supplier integration, and green customer integration, and the Scheffé method was used to analyze the impact of these four systems on corporate ecological impact and financial and social sustainability. The study also verified that the intensity of sunlight on solar panels is significantly affected by environmental temperature (ET), carbon neutrality, and the electricity generated by solar panels. The impact of carbon pricing was also explored using the probability density function (PDF) method. The contribution of this research lies in the fact that it provides evidence that solar energy can help reduce the use of fossil fuels, reducing demand for the carbon quota market. This can help lower carbon prices, thereby encouraging more businesses and countries to participate in carbon neutrality and emission reduction actions. In addition, solar power systems can replace renewable energy sources, making the carbon quota market more diverse and stable. Carbon pricing options can be used to manage the risks and uncertainties related to carbon pricing policies, and policy-makers can use them to develop appropriate risk management strategies.

The EU's carbon border adjustment mechanism: Shaped and saved by shifting multi‐level reinforcement?

AbstractIn April 2023, the EU institutions finally adopted an innovative international climate policy instrument: the Carbon Border Adjustment Mechanism (CBAM). As the long and winding road to a CBAM has included significant EU‐internal and EU‐external opposition, a “shifting Multi‐Level Reinforcement” (MLR) perspective is helpful for understanding this development. When France assumed initial leadership from 2007, skepticism to the WTO, generous amounts of free allowances, combined with a low carbon price, provided a strong oppositional force. Then, influential elements in the European Parliament called for a carbon border tax, which was subsequently included as a central ingredient in the “Fit for 55” package launched by the Commission, In the decisionmaking process, leadership involving all the previous forces resulted in an institutional reinforcement dynamic strong enough to counter EU‐internal as well as EU‐external challenges and ‘turbulence’. This case shows the relevance of an updated MLR perspective for understanding also other EU processes, taking into account the growing role of both policy packages and trilogues as decisionmaking tools, indicating a possible strengthened role for the Commission also in the decisionmaking phase.

Environmental investment timing and dual government incentives under uncertain carbon allowances

The government's post compliance cycle announcement of carbon allowances hampers firms from obtaining accurate information. Firms must estimate carbon allowances before determining the optimal environmental investment timing. Typically, firms prioritize environmental investments by introducing environmental equipment during the compliance cycle (ID) when their estimated carbon allowances are low. Conversely, they prefer to make environmental investments after the compliance cycle (IA) by purchasing carbon credits to offset excess emissions. This study aims to present a process and outcomes for firms to accurately select the timing of environmental investments based on estimated carbon allowances. Moreover, their improper timing can lead to a loss in government social welfare. To mitigate the loss, the dual government incentives of commitment and subsidies are further introduced. Contrary to the intuition that low carbon estimates would lead to an ID decision, firms should choose IA due to the higher costs and shorter lifespan for introducing environmental equipment or lower carbon prices. Generally, the government sets the least strict carbon allowances that still achieve the desired incentives while staying within the permissible spectrum of environmental preservation. However, for firms that face high market demand but experience reduced production due to technological or cost constraints, the government should provide subsidies to encourage them to adopt alternative investment timing. This will ensure product supply, maintain firm profits, and enhance social welfare.

Modified biochar reduces the greenhouse gas emission intensity and enhances the net ecosystem economic budget in black soil soybean fields

Long-term high intensity utilization leads to the degradation of black soil in Northeast China and the serious loss of organic carbon. Biochar has great potential for improving the carbon storage capacity of agroforestry ecosystems and reducing greenhouse gas (GHG) emissions. However, the effectiveness of biochar application depends on pedoclimatic factors, and few studies have explored the effects of biochar and its modified biochars on the net ecosystem economic benefit (NEEB) of black soil farmland. To increase the environmental benefits of carbon sequestration and emission reduction and to improve farmer profits, this study modified biochars by physical, chemical and biological methods, and studied the effects of different types of modified biochars on soil properties, crop yield and GHG emissions in black soil farmland through field experiments. The NEEB of different treatments was evaluated by combining carbon cost, yield benefit and biochar cost. A total of 6 treatments were used in the experiment: normal fertilization (CK), fertilization + raw biochar (BC), fertilization + physically modified biochar (PBC), fertilization + acid-modified biochar (HBC), fertilization + magnetically modified biochar (MBC), and fertilization+ biologically modified biochar (BBC) treatments. Compared with the control (CK), the application of biochar increased the content of soil organic matter by 18.76–42.57% and improved the soil fertility. The raw biochar had no significant effect on soybean yield and increased the global warming potential by 41.18%. Soybean yields significantly increased with decreasing GHG emission intensity when modified biochars were applied. Due to the high cost of biochar and the current low carbon price, the effect of biochar on crop yield is crucial for increasing the NEEB. The NEEB in the HBC treatment was the highest, 57.86% higher than that in the CK treatment and was an effective strategy for increasing crop yield while reducing GHG emissions. The results of this study could provide a theoretical basis and technical support for soybean farmland carbon sequestration, emission reduction, soil improvement and yield improvement in the black soil region of Northeast China.

Assessing the effectiveness of emissions trading schemes: evidence from China

ABSTRACT The effectiveness of carbon price in emissions trading schemes (ETS) is an important issue in China in the context of its ambitious climate change goals. This paper adopts a staggered difference-in-differences model to estimate whether China’s ETS reduced CO2 emissions while maintaining economic growth even under low carbon prices. The results indicate that despite the low carbon prices, the ETS effectively reduced CO2 emissions without undermining the economy. Specifically, an increase of $1 in the carbon price reduced CO2 emissions by 1.69% and increased the per capita GDP by $286. The carbon price primarily achieved emission reduction and promoted economic development through channels, such as technological innovation, foreign direct investment, energy mix, and industrial structure. Carbon leakage to neighboring regions was not evident. Heterogeneity analysis showed that the environmental effects of the carbon price were more pronounced in regions with higher levels of economic development and CO2 emissions. Conversely, the economic effects of the carbon price were more pronounced in regions with lower levels of economic development and CO2 emissions. The carbon price achieved significant economic effects in regions that solely adopted the free allocation mode of emission allowances, while regions that used a combination of free allocation and auctioning experienced substantial emission reduction effects.

Optimizing energy efficiency investments in steel firms: A real options model considering carbon trading and tax cuts during challenging economic conditions

This study proposes a policy mix of carbon pricing and tax cuts to incentivize firms to invest in energy-efficient technology during economic downturns and periods of low carbon prices. Utilizing a real options model, we determine the optimal timing for companies to make investments in energy efficiency technology, taking into account economic changes, carbon prices, and tax cuts. Our case study in China demonstrates that neglecting adverse economic conditions leads to an underestimation of the investment threshold and option value. We find that tax cuts, implemented within the emissions trading system, serve as an effective tool to encourage steel firms to invest in energy efficiency technology in the short to medium term. This supports carbon mitigation efforts, particularly during challenging economic situations. The flexibility of the model allows for analysis of energy efficiency technology in diverse firms and countries, as parameters can be adjusted to suit individual requirements.

The carbon reduction effects of stepped carbon emissions trading and carbon capture and storage on hybrid wind-PV-thermal- storage generation operating systems.

To accelerate the low-carbon transformation of the power industry, a range of carbon emission reduction policies and technologies have emerged. However, the current China's carbon emissions trading (CET) policy is inadequate in encouraging power generation enterprises to take proactive measures towards emission reduction due to challenges like fixed and low carbon prices. The high proportion of renewable energy in electricity consumption also faces significant challenges due to the unpredictable nature of wind and PV energy. Therefore, this paper applies stepped CET mechanism, energy storage system (ES) system and carbon capture and storage (CCS) mechanism together to hybrid renewable energy system, aiming to study their synergistic carbon emission reduction effect. Firstly, the paper constructs the stepped CET model considering incentives and penalties. Secondly, the stepped CET model, ES system and CCS are jointly introduced into the hybrid renewable energy system. Finally, a scenario analysis is conducted to investigate the synergistic effect of various carbon emissions reduction policies and technologies in the operation of power generation systems. The results show that: i) compared with traditional CET, the stepped CET increases renewable energy consumption by 0.12% and reduces carbon emissions by 0.6%; ii) the introduction of stepped CET and ES equipment together consumes an additional 36.1% of renewable energy and reduces carbon emissions by 32.4%; iii) based on stepped CET model and ES equipment, the introduction of CCS system reduces carbon emissions by 29.4%.

Multi-stage stochastic planning for a long-term low-carbon transition of island power system considering carbon price uncertainty and offshore wind power

The characteristics of isolated grids lead island power systems to rely on stable conventional generation, which is not environmentally friendly and has high carbon emissions. This paper proposes a low-carbon transition model for island power systems considering large-scale offshore wind resources and the long-term uncertainty of carbon prices. First, a detailed model for offshore wind power systems is proposed considering the interaction of multiple wind farms and three transmission technologies. Second, a multi-stage power system planning model is established including the upgrading and decommissioning of thermal units. Meanwhile, an improved long-term carbon price uncertainty modeling method based on the binomial tree is proposed. Then, focusing on the uncertainty of carbon prices, a multi-stage stochastic optimization model is established, and the stochastic nested decomposition algorithm is used to solve the problem. Finally, numerical results show that the low-carbon transition develops plenty of offshore wind power as the primary power source and usually adopts a fractional frequency transmission system for offshore wind integration. The uncertainty of carbon prices has a significant impact on the transition: in the high carbon price realization, the annual carbon emissions are only 0.088 Mt, while in the low carbon price realization, the annual emissions are 0.255 Mt.

Exploring the Relationship between the EU Emissions Trading System and Renewable Energy Development in the EU

This research paper examines the impact of the EU Emissions Trading System (EU ETS) on the development of the renewable energy market in the European Union. Using regression analysis, the study investigates the relationship between the volume of emission permits, EU GDP, and the share of renewables in the overall energy balance. The results reveal that the EU ETS has a significant negative impact on the development of the renewable energy market in the EU, with an increase in the volume of emission permits corresponding to a decrease in the share of renewables. The study also finds that economic growth alone may not necessarily lead to an increase in the share of renewables; however, when combined with other policies and measures, economic growth may promote the development of renewable energy in the EU. The findings suggest that the EU ETS needs to be improved to encourage renewable energy development effectively, and policymakers should consider introducing additional policies and measures to promote the deployment of renewable energy. In addition to analysing the impact of the EU ETS on the renewable energy market, this paper provides an overview of the EU ETS and its challenges. As a cap-and-trade system covering over 11,000 installations across the European Economic Area, the EU ETS has faced challenges from the beginning due to an oversupply of emission allowances. This resulted in a low carbon price insufficient for driving climate change mitigation. To address these issues, the EU ETS Market Stability Reserve (MSR) was established to absorb excess allowances from the market and manage past surpluses. However, the MSR cannot handle sudden shocks or future surpluses. The paper also presents data on the distribution of emission allowances by country and sector. Germany has the most significant emissions under the EU ETS, followed by Italy, Poland, and the United Kingdom. The stationary installations sector, encompassing power plants and other large industrial emitters, received the most allowances, followed by the fuel combustion sector. The data indicates that energy and industry are the largest emitters and thus receive the most ETS allowances. This research contributes to the understanding of the EU ETS and its impact on the development of the renewable energy market in the EU. The results emphasise the need to improve the EU ETS to promote the deployment of renewable energy and suggest that policymakers should consider introducing additional policies and measures to facilitate the transition to a low-carbon economy.

Can fossil energy make a soft landing？— the carbon-neutral pathway in China accompanying CCS

Carbon capture and storage (CCS) is an essential technology in the portfolio of emission mitigation solutions. The trade-off between fossil energy substitution and CCS has essential implications for achieving carbon-neutral at an affordable cost. This study couples the technology cost curve of CCS with a dynamic computable general equilibrium (DCGE) model and explores the carbon emission scale, energy structure, and emission abatement cost in the path of carbon neutrality under different CCS penetration scenarios. The results illustrate that the emission abatement cost increases fast if only relying on the emission trading scheme (ETS). Even at a high carbon price (3500 CNY/Ton), the net carbon dioxide emission will remain at 1.5 Gt in 2060, and the average emission abatement cost is 1211 CNY/Ton. The realization of net-zero emission requires synergy between ETS and CCS. The integration of CCS can significantly alleviate the economic cost when the emission mitigation scale is more remarkable than 5.2 Gt/year. The average emission abatement cost in 2060 is 557CNY/Ton under the high CCS penetration (4.3 Gt/year) and low carbon price (700CNY/Ton) carbon-neutral scenario.

The Five Canadas of Climate Change: Using audience segmentation to inform communication on climate policy.

This study examines how unique audience segments within the Canadian population think and act toward climate change, and explores whether and how the level of audience engagement moderates the effect of various messages on support for climate policy. Drawing on a random probability sample of Canadian residents (N = 1207) conducted in October 2017, we first identify and describe five distinct audiences that vary in their attitudes, perceptions and behaviours with respect to climate change: the Alarmed (25%), Concerned (45%), Disengaged (5%), Doubtful (17%) and Dismissive (8%). We then explore how each segment responds to different messages about carbon pricing in Canada. We find that messages alluding to earmarking (i.e., "Invest in solutions") or leveling the playing field for alternative energy sources (i.e., "Relative price") increase support for a higher carbon price among the population as a whole. However, these messages decreased support for carbon pricing among more engaged audiences (e.g., Alarmed) when a low carbon price was specified to the respondent. Meanwhile, the "Relative price" is the only message that increased policy support among less engaged audiences-the Concerned and the Doubtful. In addition to highlighting the importance of tailoring and targeting messages for differently engaged segments, these results suggest that communicating around the specific consequences of carbon taxes for the prices of some goods may be a fruitful way to enhance support for carbon taxes among relatively less engaged audiences.

Discussion on the effects of carbon trading for construction-related activities based on hybrid defuzzification strategy

This paper constructs and develops a bi-layer programming model (BPM) in order to validate the various advantages of combining construction-related activities (CRAs) with carbon trading mechanisms under uncertainty. Besides, a hybrid defuzzification strategy (HDS) is applied to manage the uncertainties; for example, the uncertainties regarding with carbon price are mitigated by machine learning. As well, the uncertainties surrounding construction-related costs and carbon emissions are quantified by introducing the subjective risk propensity of decision makers. Subsequently, the effectiveness of the HDS is demonstrated with sensitivity indicators by conducting simulations in different scenarios based on real data. The results show that carbon trading can cut emissions from CRAs by up to 31.9234 %, 8.1393 %, and 8.7023 % during procurement, transportation, and usage respectively, while lowering the costs by up to 0.9866 %, 0.2004 %, and 1.1267 % respectively. While carbon trading can effectively facilitate emission reduction from CRAs, the profits are not burdened. Furthermore, the key factors in the green transition process of CRAs are summarized, and it is argued that the implementation of carbon trading can lead to higher affordability of CRAs. Finally, the paper suggests that the level of carbon prices affects the schedule of CRAs, with higher construction desire in periods of low carbon prices.

Can biochar application improve the net economic benefits of tea plantations?

Biochar applied to the soil can contribute to the sustainability of agriculture by promoting ecosystem services. Tea production contributes to addressing hunger and poverty in developing countries. However, little is known about the impact of biochar amendment on ecosystem services in tea plantations. We evaluated ecosystem services from an economic assessment perspective to better understand the effects of biochar on ecosystem services and dis-services. We conducted field experiments in two subtropical tea plantations with three treatments: no fertilizer and compound fertilizers applied without and with biochar. Results showed that biochar increased the net ecosystem carbon budget by 17-fold through direct carbon addition, thus increasing regulating services. Compared to compound fertilizer alone, biochar application reduced total reactive nitrogen loss by an average of 1.8 % due to an average reduction of 16.2 % and 21.5 % in nitrous oxide and nitric oxide emissions, respectively. However, the high cost of biochar, the low environmental benefits due to the low carbon price, and the fact that biochar did not provide additional economic profit made the net ecosystem economic benefits unsatisfactory. For comparison, we set up an optimistic scenario based on the increased carbon price ($160/ton CO2-equivalent) and the documented effects of biochar on yield (+9.6 %), nitrogen leaching/runoff (−24 %), and ammonia volatilization (+14 %). The scenario analysis showed that increased yields and higher carbon prices could contribute to the increase in net ecosystem economic benefits. Taken together, our findings suggest that the impact of biochar on yield benefits is the key to biochar application and that a market-regulated carbon price accompanied by appropriate ecological compensation is necessary to effectively promote biochar application by farmers.

Analysis of emission reduction effects of carbon trading: Market mechanism or government intervention?

Carbon trading is a crucial policy to combat climate change and China's carbon market is considered one of the carbon markets to consider. Some studies have shown that China's carbon trading scheme promotes carbon reduction. However, others have shown that low carbon prices and poor liquidity characterize China's carbon market. How can China's carbon trading mechanism achieve the expected emission reduction when the market mechanism has not been fully established? To answer it, this article collected 30 Chinese provinces' panel data from 2005 to 2019 and explored the relationship between the implementation of carbon trading policies and carbon emission reduction through a multi-period difference-in-differences model. In addition, a series of robustness tests were performed. The results indicate that carbon trading does effectively curb carbon emissions. But this policy effect is not achieved through the market mechanism. In the pilot phase of China's carbon market, government intervention played a significant role in reducing carbon emissions. The results also suggest that the carbon trading mechanism promotes carbon emission reduction through energy consumption rather than industrial structure. This study enriches the empirical evidence of carbon trading and provides valuable references for policymakers and the construction of carbon markets.