Carbon Emission Trading Scheme Exproation In China And Impacts On China’s Environment And Economy:a Multi-Agent-Based Model

To promote carbon emissions reduction, China tries to implement carbon emissions trading (CET) scheme and has launched seven pilot programs in 2011 and planned to build a nationwide mechanism in 2015. However, CET hasn’t been fully enforced in China so far, most scheme deisgns are still in their trail stage. As to the initial allowance allocation design, most of the pilot programs employ history-based methods except Guangdong, which implements a combination of grandfathing and uniform-auction methods for allowance allocation, although the auction pattern only accounts for 3% of the total. Based on the practice of EU ETS (emission trading scheme) and the actual development of domestic carbon emission trading, a multi-agent based approach is adopted to form different carbon emission trading model of different stages. The details are illustrated as follows:The paper especially proposed a bottom-up simulation model to explore the optimal design for China and to analyze the impacts of different CET policies on China’s economy and environment. Different from other studies which only concentrate on certain given sectors or agents, the proposed multi-agent model considers all the behavioral agent and macroeconomic sectors to investigate the effects of CET policies on China.The paper first proposed a history-based allocation carbon emission model, which considers the grandfathing rule and benchmarking rule. The simulation results indicate that:(1) CET scheme can effectively promote carbon reduction with somewhat negative impact on economy; (2) as to history-based allocation methods, the impact of Grandfathering principle is proved relatively smaller than benchmarking principle; (3) the price of carbon credits should be carefully designed within a reasonable range, when the price level in the secondary CET market is regulated to be around RMB 40 metric ton, a satisfactory emission mitigation effect can be obtained; (4) the penlty rate is suggested to be carefully designed to balance the economy development and mitigation effect; (5) subsidy policy for energy technology improvement can effectively reduce carbon emissions without an additional negative impact on the economy.Secondly, the paper built an auction-based allocation carbon emission trading model, which considers the uniform-price auction and discriminative-price auction. The simulation results indicate that:(1) generally, the ETS would lead to positive effects on carbon mitigation and energy structure improvement, but a negative impact on economy; (2) as for auction forms, the uniform-price design is relatively moderate, while the discriminative-price design is quite aggressive in both economic damage and emissions reduction; (3) as for carbon price, the uniform-price auction might generate a slightly higher market clearing price than the discriminative-price design, and the prices under both two auction forms tend to converge to about RMB 40 per metric ton; (4) as for total carbon allowance, the total supply in the carbon auction market should be carefully set to well balance economic growth and environmental protection.The simulation results also imply our novel model can helpful provide theoretical and practical supports for the CET policy making and improvement.