Would China’s power industry benefit from nationwide carbon emission permit trading? An optimization model-based ex post analysis on abatement cost savings

An energy optimization strategy is proposed to minimize operation cost and carbon emission with and without demand response programs (DRPs) in the smart grid (SG) integrated with renewable energy sources (RESs). To achieve optimized results, probability density function (PDF) is proposed to predict the behavior of wind and solar energy sources. To overcome uncertainty in power produced by wind and solar RESs, DRPs are proposed with the involvement of residential, commercial, and industrial consumers. In this model, to execute DRPs, we introduced incentive-based payment as price offered packages. Simulations are divided into three steps for optimization of operation cost and carbon emission: (i) solving optimization problem using multi-objective genetic algorithm (MOGA), (ii) optimization of operating cost and carbon emission without DRPs, and (iii) optimization of operating cost and carbon emission with DRPs. To endorse the applicability of the proposed optimization model based on MOGA, a smart sample grid is employed serving residential, commercial, and industrial consumers. In addition, the proposed optimization model based on MOGA is compared to the existing model based on multi-objective particle swarm optimization (MOPSO) algorithm in terms of operation cost and carbon emission. The proposed optimization model based on MOGA outperforms the existing model based on the MOPSO algorithm in terms of operation cost and carbon emission. Experimental results show that the operation cost and carbon emission are reduced by 24% and 28% through MOGA with and without the participation of DRPs, respectively.

Download Full-text

Potential carbon emission abatement cost recovery from carbon emission trading in China

Journal of Modelling in Management ◽

10.1108/jm2-03-2016-0027 ◽

2016 ◽

Vol 11 (3) ◽

pp. 842-854 ◽

Cited By ~ 17

Author(s):

Ke Wang ◽

Yujiao Xian ◽

Jieming Zhang ◽

Yi Li ◽

Linan Che

Keyword(s):

Cost Saving ◽

Carbon Emission ◽

Emission Trading ◽

Cost Savings ◽

Abatement Cost ◽

Emission Permits ◽

Content Type ◽

Emission Abatement ◽

Industry Sector ◽

Emission Permits Trading

Purpose This study aims to provide an estimation of carbon dioxide (CO2) emission abatement costs in China’s industry sector during the period of 2006-2010, and additionally provide an ex-post estimation of CO2 abatement cost savings that would be realized if carbon emission permits trading among different industry sectors of 30 provinces in China during the same period were allowed, to answer the question that whether the industrial carbon emission abatement cost can (partially) be recovered from carbon emission trading in China. Design/methodology/approach The joint production framework associated with the environmental technology is utilized for formulating the models for estimating abatement costs and simulating emission permits trading scheme. Several data envelopment analysis-based models that could deal with both the desirable and undesirable outputs within the above framework are utilized for abatement cost saving estimation. The weak disposability assumption and variable returns to scale assumption are applied in the modelling. Findings In China’s industry sector, during 2006-2010, the estimated CO2 emission abatement cost was 1,842 billion yuan, which accounts for 2.45 per cent of China’s total industrial output value; the emission abatement cost saving from emission permits trading would be 315 billion yuan, which accounts for 17.12 per cent of the emission opportunity abatement cost; and additional 1,065.95 million tonnes of CO2 emission reductions would be realized from emission permits trading, and this accounts for 4.75 per cent of the total industrial CO2 emissions. Research limitations/implications The estimation is implemented at the regional level, i.e. the emission permits trading subjects are the whole industry sectors in different Chinese provinces, because of the data limitation in this study. Further estimation could be implemented at the enterprise level to provide a deeper insight into the abatement cost recovery from emission permits trading. Practical implications The estimation models and calculation process introduced in this study could be applied for evaluating the efficiency and effectiveness of pollutant emission permits trading schemes from the perspective that whether these market-based abatement policy instruments help to realize the potential abatement cost savings. Originality/value To the best of the authors’ knowledge, no study has provided the estimation of CO2 emission abatement cost and the estimation of CO2 abatement cost saving effect from emission permits trading for China’s industry sector. This study provides the first attempt to fill this research gap.

Download Full-text

Emissions trading and abatement cost savings: An estimation of China's thermal power industry

Renewable and Sustainable Energy Reviews ◽

10.1016/j.rser.2016.07.051 ◽

2016 ◽

Vol 65 ◽

pp. 1005-1017 ◽

Cited By ~ 19

Author(s):

Ke Wang ◽

Xian Zhang ◽

Xueying Yu ◽

Yi-Ming Wei ◽

Bin Wang

Keyword(s):

Emissions Trading ◽

Thermal Power ◽

Cost Savings ◽

Abatement Cost ◽

Power Industry

Download Full-text

Research on Initial Allocation and Fairness of Carbon Trading

Applied Mechanics and Materials ◽

10.4028/www.scientific.net/amm.130-134.1239 ◽

2011 ◽

Vol 130-134 ◽

pp. 1239-1243

Author(s):

Jian Rong Tang ◽

Xu Dong Gao ◽

Xiao Fang Wu

Keyword(s):

Carbon Emissions ◽

Carbon Emission ◽

Emissions Trading ◽

Effective Means ◽

Successful Implementation ◽

Carbon Trading ◽

Permit Trading ◽

Emission Permit ◽

Initial Allocation ◽

Carbon Emissions Trading

Carbon emission permit trading is widely considered an effective means to achieve optimal distribution of regional environment. The initial allocation of carbon emissions is the bases of the successful implementation of industry carbon trading. Developing low carbon economy and achieving the state’s energy saving targets are effective ways to the adjustment of economic structure, the improvement of energy efficiency and the development of new industries. The initial allocation of carbon emissions trading has a significant impact on the carbon emissions trading policy. The paper provides a theoretical basis for the choice of the allocation methods of carbon emission permit trading through the research on the fairness of carbon emission trading.

Download Full-text