A Simulation Study Of Interprovincial CO₂Emission Reduction Quota Trading In China

Energy saving and emission reduction is a long-term strategic policy to support our country’seconomic and social development. This policy is very important to save energy and protectenvironment. However, carbon dioxide emission reduction in China is a long-term and arduous task.It involves a large number of investments and may also have influence on some regional provinces. Inaddition, carbon dioxide emission reduction has the characteristics of public goods. Therefore, thegovernment policy and interventions to promote regional efforts and regional co-operation plays avery important role on this issue. This means that the government’s action is directly related toemission reduction targets to achieve. Buliding inter-provincail carbon reduction quota trading systemis effective means of the government intervention for carbon emission under the current marketeconomy.This paper reviewed the domestic and foreign related carbon emissions quota trading and carbonemission reduction costs and other related concepts and research results to get the necessity of thisessay. On the basis of it, carbon dioxide emission situation for each province is analyzed, which willoffer the quota basis on the initial allocation of emission reduction for the model construction. Basedon the literature research, the evaluation of China’s regional carbon emissions quota tradingperformance of the nonlinear programming model is established. And then the method of engineeringeconomy and regression analysis are used to estimate the marginal abatement cost function for eachprovince. Then according to different fair criterion,2010emission reduction target of our country isdistributed among the provinces and the interprovincial reduction transaction is simulated. And finallythe simulation results will be analyzed and derived at difference before and after the emissionreduction under the initial allocation of carbon emission reduction trading: first, regardless of theinitial allocation based on which of fair criterion, the introduction of interprovincial quota tradingsystem can reduce emissions into provinces net cost and total costs of mitigation; second, underdifferent fair criterion for application, regional welfare implication is different. Among them, basedon energy consumption and GDP fairne criterion, the poorer provinces (GDP of average per capitainferior) through the transaction, the total cost will reduce more.