Carbon market, sector competitiveness and carbon leakage: steel sector case

doi:10.12006/j.issn.1673-1719.2018.190

Abstract

Abstract:

In December 2017, China officially announced the launch of the national carbon market, which will provide institutional guarantees for China’s carbon emissions peaking as early as possible and coordinating environmental issues. The industries covered by the national carbon market include energy intensive sectors such as electricity, steel, cement, chemicals, paper, and non-ferrous metals. The carbon market policy is bound to have certain impacts on their competitiveness. By constructing a partial equilibrium model, this paper quantitatively analyzes the impact of carbon market on the competitiveness of China’s steel industry from the aspects of price, output, trade and carbon leakage, and makes sensitivity analysis on key parameters affecting the model results, including emission reduction cost curve, quota allocation method and trade elasticity. The research results show that the carbon market has not much impact on the competitiveness of the steel industry, but more attention should be paid to the carbon leakage issue.

Key words: Carbon market, Steel sector, Sector competitiveness, Quota allocation method, Trade elasticity, Carbon leakage

Wen-Bin LIN,A-Lun GU,Bin LIU,Zhao-Xin WANG,Ling-Ling ZHOU. Carbon market, sector competitiveness and carbon leakage: steel sector case[J]. Climate Change Research, 2019, 15(4): 427-435.

Figures/Tables 8

Table 1 Three typical scenarios

Fig. 1 Changes in price (a, b) and output (c, d) of the steel industry under different carbon price and allowance auction ratio

Fig. 2 CO2 emission of the steel industry under different carbon price and allowance auction ratio

Fig. 3 Carbon leakage of the steel industry under different carbon price and allowance auction ratio

Fig. 4 Marginal abatement cost curves of the steel industry obtained by different models

Fig. 5 Comparison of model results under different marginal abatement cost curves

Fig. 6 Comparison of model results under different Armington elasticities

Fig. 7 Comparison of model results under different allowance allocation modes

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