A Dynamic CGE Model Based Assessment Of Carbon Emissions Trading

China will introduce a national carbon trade market in 2017.This study investigates the impacts of launching a national carbon trade market through a multi-sector,multi-region,recursive dynamic computable general equilibrium?CGE?model,between Shanghai and the Rest of China?ROC?.Five scenarios are established and assessed by considering China's Intended Nationally Determined Contributions?INDC?targets,including a baseline scenario?BaU scenario?,a carbon cap on ETS participating sectors scenario?CAPsec scenario?,a carbon cap on entire Shanghai and ROC scenario?CAPreg scenario?,a carbon cap scenario with local carbon emissions trade among ETS participating sectors?ETsec scenario?and a carbon cap scenario with inter-regional carbon emissions trade?ETreg scenario?.Relative to the baseline scenario,economic impacts are minimized under the ETreg scenario compared with the other three scenarios.Carbon emissions quota sales offset GDP loss and total sectoral output.The results under the ETreg scenario predict a carbon price of 164.64 USD/tCO₂ and a total carbon trade volume of 189.91 Mt by 2030.The metal smelting sector with the lowest carbon abatement cost will be the largest seller of emissions quotas in Shanghai,whereas the power generation sector will be the largest buyer.The aviation sector due to its relatively higher carbon mitigation cost and increasing autonomous carbon intensity will be the most challenged sector to reduce emissions among ETS participating sectors in Shanghai.The results indicate that launching a national carbon trade market could generate both economic and environmental benefits and help China achieve its INDC targets.