Climate Change Research ›› 2020, Vol. 16 ›› Issue (5): 617-631.doi: 10.12006/j.issn.1673-1719.2020.069

• Greenhouse Gas Emissions • Previous Articles     Next Articles

Research on carbon trading mechanism of China at the background of achieving the NDC targets

XIAO Qian1(), PANG Jun2(), Xu Yun2, CHEN Hui1, Zeng Wen-Wan2   

  1. 1 Energy Development Research Institute, China Southern Power Grid, Guangzhou 510080, China
    2 School of Environment and Natural Resources, Renmin University of China, Beijing 100872, China
  • Received:2020-04-09 Revised:2020-05-22 Online:2020-09-30 Published:2020-09-30
  • Contact: PANG Jun;


Under the background of achieving China’s targets of Nationally Determined Contributions (NDC), a recursive dynamic Computable General Equilibrium (CGE) model with distinguished disaggregation in the electric power sector was developed to simulate the implementation effects and economic impacts of different designs of carbon trading mechanism for the national carbon market. Results show that national carbon market can help China to achieve the NDC targets and reduce the negative impacts of carbon emission reduction on GDP growth. Comparing with the rule of grandfathering allocation based on carbon emission, allocating initial carbon allowance freely under the rule of benchmarking allocation based on carbon-intensity can decrease carbon price, increase the volume of trading allowance and enlarge the scale of the carbon market. Allocating initial carbon allowance by auctioning will cause larger mitigation cost for the industries covered by the carbon market but can increase government revenue. Levying carbon tax on industries and households not covered by the carbon market can control their carbon emission effectively, increase government revenue, reduce the carbon trading price and promote the achievement of China’s NDC targets. The national carbon market will restrain thermal power industry whereas promote the development of clean energy power generation industries to different extent.

Key words: National carbon market, Carbon trading mechanism, Carbon tax, Computable General Equilibrium (CGE) model, Nationally Determined Contributions (NDC)

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