Carbon Emission Price Research Articles

Carbon emission and ethanol markets: evidence from Brazil

AbstractThe production of ethanol has increased globally over the last decade. It is mainly produced from corn and sugarcane, so earlier studies mainly investigated the impact of food prices on ethanol prices. Although biofuels have been brought into the energy markets to reduce the volume of carbon emissions, the links between ethanol and carbon emission markets have not been explored sufficiently in the existing literature. This study aimed to extend the literature in this field by using a GARCH‐jump process to examine whether Brazilian ethanol prices are affected by carbon emission prices. Our key findings are threefold. First, carbon emission prices affect Brazilian ethanol prices positively. Rising emission prices would therefore cause an increase in the ethanol price. Second, time‐varying jumps occur in the ethanol price index. Third, the impact of emission prices on the ethanol market is asymmetric, implying that increases and decreases in emission prices would have heterogeneous effects on ethanol price levels. Our findings have important implications for scholars, investors, and policymakers. © 2018 Society of Chemical Industry and John Wiley & Sons, Ltd

Energy Supply and Decarbonisation Beyond Brexit: Politics and Policy

Energy Supply and Decarbonisation Beyond Brexit: Politics and Policy

An Empirical Analysis of Carbon Emission Price in China

Carbon emission trading, as an effective economic tool to deal with climate change issues, has received widespread attention in recent years. As a major carbon emitter, China plays an important role in global climate change. This paper uses the Vector Error Correction (VEC) model to explore the dynamic relationship between energy price, macroeconomic indicators, air quality, and carbon emission trading price. The results show that there is a long-term equilibrium relationship between these selected indicators and carbon emission trading price. In addition, this paper also uses the Generalized Auto-Regressive Conditional Heteroskedasticity (GARCH) model to analyze the carbon price fluctuation characteristics. It is found that there is a positive leverage effect on the price fluctuation of the selected carbon emission return series. External bad news will have a greater impact on carbon price fluctuation than good news.

An analysis of the effect of carbon emission, GDP and international crude oil prices based on synthesis integration model

PurposeThis paper aims to analyze the impact of the relations between the US oil prices, carbon emissions and GDP through the analysis of data between 1987 and 2017.Design/methodology/approachARIMA, VAR and VEC models are used to establish synthesis integration model. Furthermore, the stability test, cointegration test and Granger causality test of the model were carried out.FindingsThe results indicate that, in both short and long term, change in oil prices is the reason for change in carbon emissions, while GDP is not the reason for the growth of carbon emissions.Originality/valueIncrease of oil prices would have a negative impact on carbon emissions, and GDP growth does not lead to an increase in carbon emissions.

Remanufacturing and promotion in dual-channel supply chains under cap-and-trade regulation

This paper investigates the issue of remanufacturing in a dual-channel supply chain. The manufacturer can produce/remanufacture the products and sell them at the same price through his own direct channel or a retail channel. Based on the cap-and-trade regulation, we construct two models with and without remanufacturing to obtain the optimal levels of carbon emission reduction and pricing strategies. The results indicate that remanufacturing can effectively improve the level of carbon emission reduction, and it is profitable to the manufacturer and the retailer. Furthermore, with remanufacturing, we investigate the effect of product promotion where the manufacturer can promote via direct channel (manufacturer's promotion), and the retailer can promote via retail channel (retailer's promotion). With the manufacturer's promotion, the results show that both the level of carbon emission reduction and profit of the manufacturer increase, but the retailer's profit decreases. On the other hand, the retailer's promotion can improve the profits of the retailer and the manufacturer when more consumers prefer the retail channel. Finally, we provide more managerial insights in the sensitivity analysis and extension parts.

PRICING CARBON EMISSIONS IN CHINA

The review paper provides a strategy for determining carbon emissions pricing in China to guide how carbon emissions might be mitigated to reduce fossil fuel pollution. China has promoted the development of clean energy, including hydroelectric power, wind power, and solar energy generation. In order to involve companies in carbon emissions control, regional and provincial carbon markets have been established since 2013. As China’s carbon market is organized domestically, and not necessarily using market principles, there has been little research on China’s carbon price and volatility. This paper provides an introduction to China’s regional and provincial carbon markets, proposes how to establish a national market for pricing carbon emissions, discusses how and when these markets might be established, how they might perform, and the subsequent prices for China’s regional and national carbon markets. Power generation in manufacturing consumes more than other industries, with more than 40% of total coal consumption. Apart from manufacturing, the northern China heating system relies on fossil fuels, mainly coal, which causes serious pollution. In order to understand the regional markets well, it is necessary to analyze the energy structure in these regions. Coal is the primary energy source in China, so that provinces that rely heavily on coal receive a greater number of carbon emissions permits. In order to establish a national carbon market for China, a detailed analysis of eight important regional markets is presented. The four largest energy markets, namely, Guangdong, Shanghai, Shenzhen, and Hubei, traded around 82% of the total volume and 85% of the total value of the seven markets in 2017, as the industry structure of the western area is different from that of the east. The China National Development and Reform Commission has proposed a national carbon market, which can attract investors and companies to participate in carbon emissions trading.

Marginal abatement cost of agricultural carbon emissions in China: 1993-2015

PurposeThe purpose of this paper is to estimate shadow prices of agricultural carbon emissions produced by agricultural inputs, rice paddy and burning crop residue, and to explore the impact of cropping pattern on marginal abatement cost (MAC).Design/methodology/approachThe shadow price of agricultural carbon emissions is estimated by applying directional distance function and non-parametric methods.FindingsThe estimated shadow price of agricultural carbon emissions ranges from 6.78 to 557.83 yuan/ton, and the average value is 62.50 yuan/ton (or $10.18/ton). The MAC value varies in different provinces and years. The regional difference of MAC shows a decreasing trend during the investigation period. Cropping pattern shows a significant negative impact on agricultural MAC. A 1 percent decrease of rice proportion leads to a 0.31 percent increase in MAC value. This implies that the higher the proportion of rice is, the lower the economic cost to reduce agricultural carbon emissions would be.Practical implicationsIt is feasible to draw up appropriate mechanisms for the allocation of emission reduction responsibilities according to conditions in various regions, with emphasis on the local cropping patterns. There is a trade-off between reducing carbon emission and increasing crop yields.Originality/valueThis study calculates agricultural MAC by using the shadow price approach, taking agricultural carbon emissions as undesired environmental output. The study also provides a reference emission right price and provides guidance to make use of cropping structure adjustment and optimization for exploring the emission reduction strategy.

Carbon Footprint Constrained Profit Maximization of Table Grapes Cold Chain

Low-carbon production is one of the dominating issues in the sustainable development of the food industry with high energy consumption, especially in the table grapes cold chain. The aim of this paper is to propose a profit maximization strategy of table grapes cold chain by integrating the carbon footprint to improve the low-carbon production and sustainability of the cold chain system. The carbon footprint was evaluated by life cycle assessment (LCA) in entire cold chain system of table grapes, and the economic order quantity (EOQ) model was used to develop the profit maximization model with minimal carbon footprint and to maintain the optimal balance between stock and cost. The profit optimization performance, the sensitivity performance and the influencing factors of the decay rate, the carbon emission price, and the distance and carbon emission coefficient in refrigerated transport were analyzed according to the profit maximization model and the inventory data in actual cold chain investigated. The sensitivity performance analysis illustrated that the selling price had the highest sensitivity, and the carbon emission coefficient in storage had the lowest sensitivity. The comprehensive analysis results indicated that there is an optimal combination point between the economy and environment in actual cold chain, which not only reduced the carbon emission, but also had minimal impact on the profit in cold chain. The enterprises should integrate the carbon footprint cost into the profit maximization once the carbon emission tax is levied. The proposed strategy of the profit maximization with carbon footprint constraint is also suitable for improving profit maximization of other low-carbon supply chain applications.

Adoption of solar and wind energy: The roles of carbon pricing and aggregate policy support

This paper analyzes the roles of policies and preferences in national adoption of solar and wind energy technologies. We use cross-sectional and panel regressions for both the European Union and a broader international sample. We find that countries that price carbon emissions have gone on to adopt more solar and wind energy. The aggregate level of policy support, measured in euros per megawatt hour, appears to have been important for solar energy adoption. We also find that solar energy adoption has been larger in countries with higher proportions of people concerned about climate change. In addition, we assess the effects of other key explanators including financial system size and income levels.

Non-cooperative and cooperative climate policies with anticipated breakthrough technology

Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.

E&P Notes (April 2018)

E&P Notes Alternatives No Threat to Oil, Aramco CEO Says John Donnelly, JPT Editor Alternative energy options and worries about climate change are not a threat to the oil and gas industry, which will need increased investment just to keep up with future demand, said the chief executive officer of Saudi Aramco. The idea that alternatives to hydrocarbons such as electric vehicles will displace oil and gas in the global fuel mix any time soon is a gross oversimplification, Amin Nasser, the head of Saudi Aramco, said during the annual CERAWeek conference by IHS Markit, which took place last month in Houston. “I am not losing any sleep over the idea of peak oil demand or stranded resources,” he said. IEA Sees No End to US Shale Output Surge Matt Zborowski, Technology Writer US crude production is projected to surge to 12.1 million B/D by 2023 amid “a second wave” of shale output increases, making the country the world’s largest oil producer, according to the International Energy Agency’s latest 5-year market forecast. The new wave is underpinned by higher oil prices following the pact between OPEC producers and a group of non-OPEC countries to collectively curb out-put through this year. “Everyone has benefited” from the deal, and newfound optimism has spread through the industry, said OPEC Secretary General Mohammed Barkindo during the CERAWeek conference by IHS Markit in Houston. ExxonMobil Exits Russian Ventures, Continues Success off Guyana Matt Zborowski, Technology Writer ExxonMobil marked a continued companywide transition for the world’s largest public oil and gas firm, headlined by its withdrawal from once-promising Russian joint ventures (JVs) and its announcement of a seventh oil discovery off Guyana. According to a filing with the US Securities and Exchange Commission, ExxonMobil is pulling out of its JVs with Rosneft, established earlier this decade, that involved exploration and development of Arctic, Black Sea, and shale resources. ExxonMobil’s role in those partner-ships was quashed when the US government levied sanctions on Russia in 2014 following its annexation of Crimea and expanded those measures in late 2017. ExxonMobil sued the US Department of the Treasury last year in response to a $2-million fine for violating the 2014 sanctions. BP: Robust Adoption of Electric Vehicles Would Not Stop Oil Consumption Growth Joel Parshall, JPT Features Editor Even a robust adoption of electric vehicles (EVs) over the next 2 decades would not eliminate the growth of either global oil consumption or carbon emissions, BP Chief Economist Spencer Dale said in February as the company introduced its 2018 Energy Outlook. And to meet the goals of the Paris Climate Accord, Dale said, the outlook concludes that a system of global carbon emission pricing and increased regulation to spur energy efficiency and fuel switching would probably be needed in addition to EV adoption. Projecting the future impact of EVs on oil consumption and emissions involves more than counting the number of them and their percentage share in the global vehicle fleet, he said. Another Big Gas Field Starts Production Offshore Egypt Matt Zborowski, Technology Writer The Atoll Phase One project in the East Nile Delta is flowing 350 MMcf/D of gas and 10,000 B/D of condensate to shore after starting up “7 months ahead of schedule and 33% below the initial cost estimate,” operator BP reported. The $1-billion project in the North Damietta concession provides another heavy stream of gas for domestic use in Egypt following the 2017 production launches of the Eni-operated supergiant Zohr field and the BP-operated Taurus and Libra fields of the West Nile Delta development. BP has a 10% stake in the Shorouk concession containing Zohr, which is expected to flow 1 Bcf/D by mid-year. The British supermajor operates the West Nile Delta project with an 82.75% interest in the project partnership.

Effect of carbon emission policy on fresh aquatic product carriers in augmented reality respective: a parallel simulation research based on genetic algorithm

During the transportation of aquatic products, living states of the aquatic products and carbon emission of the carriers are respectively the concerns of the carrier enterprises and the government. Drivers adds virtual living states of aquatic products to the real driving environments through augmented reality technology to help themselves control oxygen contents and temperatures, and choose distribution routes. Furthermore, the effectiveness of carbon emission policy is investigated by simulating the impact of the policy on the distribution operations. In the simulation, the carriers take the minimization of overall costs of the distribution operations as the objective. In order to meet the requirements of carbon emission policies, factors of customer demands, road lengths and road congestion are used to determine the distribution. The simulation is implemented based on genetic algorithm: total costs are used as fitness values, and distribution sequences are encoded into chromosomes. And the carbon emission price is introduced as a operating parameter. Through running the simulation, we obtained the overall costs, carbon emission amounts and carbon emission costs. And a linear equation are fitted on the output data passed the reliability test. Based on the linear equation, it is concluded that the increase of the carbon emission price is helpful in reducing carbon emission amount, but it would greatly increase the operation costs of the carriers.

Cooperation Modes of Operations and Financing in a Low-Carbon Supply Chain

With the significant increase of fossil energy consumption and the ever-worsening pollution of environment, low-carbon development becomes an inevitable choice. Carbon finance can help firms alleviate the finance pressure from carbon emission reduction. This research explores two financing methods, delay-in-payment and bank loan; and two cooperation decisions, carbon emission reduction cooperation and price cooperation. Four scenarios are considered: non-cooperation, partial-cooperation delay-in-payment, supply chain carbon finance (SCCF), and full-cooperation. We discuss how firms make their pricing and carbon emission reduction decisions under different cooperative levels and financing methods. For a manufacturer-dominated supply chain, the results show that SCCF will help the small and medium enterprise seek cooperation with the monopoly manufacturer, and improve supply chain’s profit compared to green loan. What’s more, SCCF pattern can effectively control the total carbon emission. In addition, we extend the model to consider the retailer-dominated case. The results show that SCCF pattern can help increase the emission reduction rate of the whole supply chain. From the perspective of emission reduction efficiency, it is better for the government to promote the SCCF mode in the retailer-dominated supply chain.

A Study on the Law of Cyclical Fluctuation of Carbon Price—Empirical Evidence from EU ETS

Based on the trading data of the Bluenext and the European Climate Exchange (ECX), this paper analyzes the cyclic price fluctuations of the EU carbon emission rights by means of the maximum entropy spectrum and wavelet variance. The results show that: 1) there are obvious cyclical price fluctuations in the EU carbon trading market, with the longest cycle being 33 months and the shortest 5.7; 2) researches on the factors that affect the cyclical price fluctuations of carbon emission rights manifest that power prices (POWER) exert the greatest implication on the prices of carbon emission rights, followed by coal prices (COAL). For every 1% change in POWER, the price of carbon emission rights changes 10.95% towards the same direction. For every 1% change in COAL, the price of carbon emissions changes 9.28% towards the opposite; 3) research based on variance decomposition demonstrates that electricity prices contribute the most to the changes of the price of carbon emissions, and the variance contribution rate is 13% at a lag cycle of 30 days.

Establishing National Carbon Emission Prices for China

The purpose of the paper is to establish national carbon emissions prices for the People’s Republic of China, which is one of the world’s largest producers of carbon emissions. Several measures have been undertaken to address climate change in China, including the establishment of a carbon trading system. Since 2013, eight regional carbon emissions markets have been established, namely Beijing, Shanghai, Guangdong, Shenzhen, Tianjin, Chongqing, Hubei and Fujian. The Central Government announced a national carbon emissions market, with power generation as the first industry to be considered. However, as carbon emissions prices in the eight regional markets are very different, for a variety of administrative reasons, it is essential to create a procedure for establishing a national carbon emissions price. The regional markets are pioneers, and their experience will play important roles in establishing a national carbon emissions market, with national prices based on regional prices, turnovers and volumes. The paper considers two sources of regional data for China’s carbon allowances, which are based on primary and secondary data sources, and compares their relative strengths and weaknesses. The paper establishes national carbon emissions prices based on the primary and secondary regional prices, for the first time, and compares both national prices and regional prices against each other. The carbon emission prices in Hubei, Guangdong, Shenzhen and Tianjin are highly correlated with the national prices based on the primary and secondary sources. Establishing national carbon emissions prices should be very helpful for the national carbon emissions market that is under construction in China, as well as for other regions and countries worldwide.

Non-Cooperative and Cooperative Climate Policies with Anticipated Breakthrough Technology

Global warming can be curbed by pricing carbon emissions and thus substituting fossil fuel with renewable energy consumption. Breakthrough technologies (e.g., fusion energy) can reduce the cost of such policies. However, the chance of such a technology coming to market depends on investment. We model breakthroughs as an irreversible tipping point in a multi-country world, with different degrees of international cooperation. We show that international spill-over effects of R&D in carbon-free technologies lead to double free-riding, strategic over-pollution and underinvestment in green R&D, thus making climate change mitigation more difficult. We also show how the demand structure determines whether carbon pricing and R&D policies are substitutes or complements.

Pricing Carbon Emissions in China

The purpose of the paper is to provide a clear mechanism for determining carbon emissions pricing in China as a guide to how carbon emissions might be mitigated to reduce fossil fuel pollution. The Chinese Government has promoted the development of clean energy, including hydroelectric power, wind power, and solar energy generation. In order to involve companies in carbon emissions control, a series of regional and provincial carbon markets have been established since 2013. Since China’s carbon market was established in 2013 and mainly run domestically, and not necessarily using market principles, there has been almost no research on China’s carbon price and volatility. This paper provides an introduction to China’s regional and provincial carbon markets, proposes how to establish a national market for pricing carbon emissions, discusses how and when these markets might be established, how they might perform, and the subsequent prices for China’s regional and national carbon markets. Power generation in manufacturing consumes more than other industries, with more than 40% of total coal consumption. Apart from manufacturing, the northern China heating system also relies on fossil fuels, mainly coal, which causes serious pollution. In order to understand the regional markets well, it is necessary to analyze the energy structure in these regions. Coal is the primary energy source in China, so that provinces that rely heavily on coal receive a greater number of carbon emissions permits from the Chinese Government. In order to establish a national carbon market for China, a detailed analysis of eight important regional markets will be presented. The four largest energy markets, namely Guangdong, Shanghai, Shenzhen and Hubei, traded around 82% of the total volume and 85% of the total value of the seven markets in 2017, as the industry structure of the western area is different from that of the eastern area. The China National Development and Reform Commission has proposed a national carbon market, which can attract investors and companies to participate in carbon emissions trading. This important issue will be investigated in the paper.

Coordinating a Two-Echelon Supply Chain under Carbon Tax

In this paper, we study the impact of carbon tax on carbon emission and retail price in a two-echelon supply chain consisting of a manufacturer and a retailer. Specifically, by adopting two types of contracts, i.e., the modified wholesale price (MW) and the modified cost-sharing contract (MS), supply chain coordination is achieved, which promotes the supply chain efficiency. Our study shows that: (1) with the increase of carbon tax, both the optimal emission reduction level and the optimal retail price increase, and then keep unchanged; (2) neither MW nor MS benefits the manufacturer after the supply chain coordination; and (3) to effectively coordinate the supply chain, we propose an innovative supply chain contract that integrates the firms’ optimal decisions under MW or MS with a two part tariff contract (TPT) and a fixed fee the retailer can pay to ensure a win–win solution.

Carbon emission reduction and pricing policies of a supply chain considering reciprocal preferences in cap-and-trade system

The traditional self-interest hypothesis is far from perfect. Social preference has a significant impact on every firm’s decision making. This paper incorporates reciprocal preferences and consumers’ low-carbon awareness (CLA) into the dyadic supply chain in which a single manufacturer plays a Stackelberg-like game with a single retailer. This research intends to investigate how reciprocity and CLA may affect the decisions and performances of the supply chain members and the system’s efficiency. In this study, the following two scenarios are discussed: (1) both the manufacturer and the retailer have no reciprocal preferences and (2) both of them have reciprocal preferences. We derive equilibriums under both scenarios and present a numerical analysis. We demonstrate that reciprocal preferences and CLA significantly affect the equilibrium and firms’ profits and utilities. First, the optimal retail price increases with CLA, while it decreases with the reciprocity of the retailer and the manufacturer; the optimal wholesale price increases with CLA and the retailer’s reciprocity, while it decreases with the manufacturer’s reciprocity. The optimal emission reduction level increases with CLA and the reciprocity of both the manufacturer and the retailer. Second, the optimal profits of the participants and the supply chain increase with CLA, the participants’ optimal profits are concave in their own reciprocity and increase with their co-operators’ reciprocity. Third, the participants’ optimal utilities increase with CLA and their reciprocity. Finally, the supply chain efficiency increases with the participants’ reciprocity, while the efficiency decreases with CLA.

Carbon Prices for The Next Hundred Years

This paper examines the socially optimal pricing of carbon emissions over time when climate-change impacts are unknown, potentially high-consequence events. The carbon price tends to increase with income. But learning about impacts, or their absence, decouples the carbon price from income growth. The price should grow faster than the economy if the past warming is not substantial enough for learning the true long-run social cost. It grows slower than the economy as soon as the warming generates information about events that could have arrived but have not done so. A quantitative assessment shows that the price grows roughly at the rate of the economy for the next 100 years.