Research Of China’s Emission Trading Scheme Under The Goal Of Peak Emissions

In response to the stringent temperature targets assigned in Paris Agreement,China has committed to peak carbon emissions by latest 2030,and reduce the carbon emissions per unit of GDP(i.e.,carbon intensity)in 2030 by 60%–65% against the2005 levels.How to implement policy tools for reducing the emission abatement costs(EACs)in achieving these dual goals has gained substantive attention in the field of climate governance.Emission trading scheme(ETS)that serves as a representative of carbon pricing policy,enables the regions to trade-off the emission reduction and economic growth.Yet,the recent years have witnessed a series of challenges that not only impede the development of regional ETS but also distort the cost-effectiveness,e.g.,inactive trading,steep decline in carbon price,disincentive effects on low-carbon investment.The unaddressed questions of emission cap setting,sectoral coverage,and carbon emission allowance(CEA)allocation can be the main attribute in theory.Bringing clarity to these questions becomes the top priority for achieving China’s dual goals in a cost-effective manner.In light of China’s dual goals by 2030,this thesis first claims the theoretical basis of CEA and demonstrates the mechanism of regional carbon trading in a systematic way.By utilizing the scenario analysis,non-linear programming,etc.,we then propose a harmonized approach accounting for China’s total CEA compatible with these dual goals,determine the sectoral coverage based on the marginal cost savings of each sector,develop the hybrid CEA allocation that combines the bottom-up and top-down approaches,and investigate the impacts of initial CEA allocation on the trading strategy of Chinese provinces and sectors.By doing so,this thesis can roadmap the design of China’s ETS from three aspects,i.e.,emission cap setting,sectoral coverage,and CEA allocation.Our results demonstrate that: 1)The bundle of socioeconomic pathways of China enlarge the deviation of emission reduction quotas(ERQs)in 2018–2030 that are estimated between 4484.44 Mt and 6457.46 Mt.Compared to the economic growth rate and time for peak emissions,strengthening the reduction targets of China’s carbon intensity in 2030 significantly increases the ERQs.2)Coverage extension of ETS can improve the efficiency and fairness of provincial EACs,but its margin will exhibit a progressive decline.Specifically,including six sectors(e.g.,electricity and heat production)out of 29 in ETS saves China’s EACs by more than 80%.It implies that a small sectoral coverage can even save majority of EACs.3)The initial allocation of CEA has no impact on China’s EACs but plays an important role in the trading strategy of provinces and sectors.At provincial scales,the hybrid approach will not only satisfy the different preferences for CEA allocation but also narrow the gap of provincial EACs and reduce the market risks.At sectoral scales,the emission-based grandfathering minimizes the difference in sectoral EACs and the market scale of ERQs.