Research On The Low-carbon Transition Pathway Of China’s Power Generation Industry From The Perspective Of Carbon Market Evolvement

China’s ambitious goal of“Carbon Peaking in 2030 and Carbon Neutralization by2060”has accelerated the low-carbon transition of its all sectors,the power generation sector bears the brunt.The carbon emissions trading mechanism（ETS）,as one of the most significant forces to push the low-carbon transition,is catching more and more attention.However,China’s current ETS is unmatured,viewing from the perspective of evolvement,innovative trading products should be introduced into the market,i.e.,carbon futures,which can effectively stimulate decarbonization.Literature review shows that the assessment of the stimulation of carbon futures to carbon mitigation is scant,which leaves a large academic gap to fill.China’s power generation sector was the first sector to be included in China’s national carbon market and is as well expected to become the first sector to enter the carbon futures trading market in the future.As a result,quantifying the actual impacts of carbon futures on the low-carbon transition of China’s power generation sector,is undoubted of great academic and practical value.This article aims to establish an integrated model to innovatively explore this topic,hoping to bridge the above-mentioned cognitive gap.Firstly,through market efficiency tests and data sorting,this article gives a panoramic picture of China’s carbon market.In terms of carbon market efficiency testing methods,it is believed that the multi-fractal detrending method used in existing research,whose theoretical basis（Fractal Market Hypothesis）is contrary to the actual carbon market,therefore it is not applicable to the research of China’s pilot carbon markets.The Variance Ratio test method is more applicable to China’s pilot carbon markets,therefore is applied to detect the market efficiency.Secondly,concerning quantitatively evaluating carbon futures’impacts on the low-carbon transition of China’s power generation sector,by using the profit maximization oriented production decision model,which also considers carbon prices,this research gave the optimal carbon mitigation volume when producing 1 unit of electricity;Combining the currently available low-carbon technologies,the life cycle environmental impacts assessments are implemented,as a means to get the potential mitigation benefits of certain decarbonization trajectories;based on these,set the maximization of mitigation benefits as the objective function,genetic algorithms are used to find out the optimal decarbonization pathway for the power generation sector.Specific results are as follows:（1）Hubei carbon emissions market（HBEM）is the most representative pilot carbon market in China.The market efficiency test results on HBEM show that the market efficiency value of the research sample period（2014.4.2-2020.8.31）is 0.3951,which is far lower than 1（the level of the effective market）.Combining with the K statistic criterion,the market is judged to be in a weak efficient state.The sub-sample test results show that the market efficiency value increased from the initial 0.3621 to0.4027,then fell back to 0.3985,indicating that the efficiency of the Hubei pilot carbon market was continuously improving,but it was slightly reduced under the impact of COVID-19.（2）Carbon futures trading can effectively stimulate the low-carbon transition of China’s power generation sector.Driven by carbon futures,the optimal decarbonization pathway for this sector between 2021 and 2030 is:increase capacity installation by332.54 GW of photovoltaic power generation capacity,330.34 GW of wind power generation capacity,and 263.11 GW of pure biomass burning power generation capacity,while upgrading 373.70 GW of supercritical coal-firing units and 93.42 GW of ultra-supercritical coal-firing units（from coal combustion to 20%biomass and coal mixed combustion）.This low-carbon transition pathway is in line with the power enterprises’pursuit of profit maximization in the process of decarbonization,and around 1.821billion tonnes of CO₂ emissions can be reduced,10.43 trillion RMB of co-benefits can be achieved（accounting for 11.35%of China’s GDP in 2018）.Besides,scenario analysis shows that carbon futures trading can drive the realization of China’s carbon neutralization target by 8 years ahead of schedule.All in all,the results of this article support the introduction of carbon futures trading in China’s carbon market.Carbon futures trading plays a significant role in guiding the low-carbon transition of the power generation sector,and can bring greater co-benefits.The authorities should step up to formulate and improve regulatory rules and get prepared for the introduction of carbon futures trading.