The effectiveness of China’s regional carbon market pilots in reducing firm emissions

China has implemented an emission trading system (ETS) to reduce its ever-increasing greenhouse gas emissions while maintaining rapid economic growth. With low carbon prices and infrequent allowance trading, whether China’s ETS is an effective approach for climate mitigation has entered the center of the policy and research debate. Utilizing China’s regional ETS pilots as a quasi-natural experiment, we provide a comprehensive assessment of the effects of ETS on firm carbon emissions and economic outcomes by means of a matched difference-in-differences (DID) approach. The empirical analysis is based on a unique panel dataset of firm tax records in the manufacturing and public utility sectors during 2009 to 2015. We show unambiguous evidence that the regional ETS pilots are effective in reducing firm emissions, leading to a 16.7% reduction in total emissions and a 9.7% reduction in emission intensity. Regulated firms achieve emission abatement through conserving energy consumption and switching to low-carbon fuels. The economic consequences of the ETS are mixed. On one hand, the ETS has a negative impact on employment and capital input; on the other hand, the ETS incentivizes regulated firms to improve productivity. In the aggregate, the ETS does not exhibit statistically significant effects on output and export. We also find that the ETS displays notable heterogeneity across pilots. Mass-based allowance allocation rules, higher carbon prices, and active allowance trading contribute to more pronounced effects in emission abatement.

The Orchestrating Role of Carbon Subsidies in a Capital-Constrained Supply Chain

In this paper, we investigate the role of carbon subsidies in a capital-constrained supply chain. We analyze two green technology investment structures in such supply chains: one where the manufacturer determines the optimal carbon emission abatement level (MI-structure) and one where the retailer determines the optimal carbon emission abatement level (RI-structure). As the leader (the powerful participant or the first mover in a supply chain), the manufacturer may choose the investment structure that is most favorable to them. Our major findings are as follows: (1) carbon subsidies can improve the performance of a centralized green supply chain; (2) there exists a threshold value of carbon subsidy that determines the manufacturer’s choice of the best carbon emission abatement investment structure, but the retailer always benefits from RI-structure; and (3) the traditional cost-sharing contract fails to achieve green supply chain coordination. However, as an orchestrator, the carbon subsidy plays a crucial role in achieving quantity coordination when implemented alongside traditional cost-sharing contracts. Furthermore, using a parameter of side-payment, we propose a new contract design that facilitates win-win coordination.

Financing Strategy and Carbon Emission Abatement in a Supply Chain considering Retailers’ Competition

This paper investigates the issues of financing channels (bank credit financing, trade credit financing, and dual-channel financing) and carbon emission abatement in a supply chain consisting of one capital-constrained manufacturer and two capital-constrained retailers. Compared with bank credit, we find that every member can make more profit under trade credit when only one financing channel is available. When both bank credit and trade credit are available, the retailers’ financing strategy highly depends on the interest rates charged by the creditors. In addition, we also examine the impact of financing channels on emission abatement. It shows that the manufacturer reduces more carbon emissions under trade credit. Interestingly, the emission abatement has nothing to do with trade credit interest rate when retailers only adopt trade credit, whereas it is closely related to trade credit interest rate under dual-channel financing.

Air Pollutant Emission Abatement of the Fossil-Fuel Power Plants by Multiple Control Strategies in Taiwan

This study is an investigation of air pollutant emission abatement in the electricity generation sector from fossil-fuel power plants in Taiwan in 2014 and 2018. PM concentrations are determined by the results of regular tests, while SOx and NOx are determined by continuous emission monitoring systems (CEMS) of flue gas from power plants. The results indicate that electricity generation from fossil-fuel power plants increased by 13.8% from 2014 to 2018. However, emissions of air pollutants from fossil-fuel power plants declined during this period. The results indicate that the annual emissions of SOx, NOx, and PM were 40,826, 59,196, and 5363 tons per year (TPY), respectively, in 2014. The emissions decreased to 30,097 TPY (28% reduction) for SOx, 48,530 TPY (18% reduction) for NOx, and 4496 TPY (16% reduction) for PM in 2018. The ensemble mean values of each air pollutant emission factor also decreased significantly. SOx emissions decreased from 0.2443 to 0.1583 mg/kWh (35% reduction). NOx emissions decreased from 0.3542 to 0.2552 g/kWh (28% reduction). PM emissions decreased from 0.0321 to 0.0236 mg/kWh (26.5% reduction). The results indicated that phasing out of high-pollutant generating units and switching the fuel from coal to natural gas could abate the emissions of SOx and PM, and NOx emissions could be abated by introducing control devices. In addition, new power generation sectors will be constructed and equipped with ultra-low emission control systems to reduce air pollution and create a cleaner and healthier electricity generation system in Taiwan.

Emission Abatement Technology Selection, Routing and Speed Optimization of Hybrid Ships

This paper evaluates the effect of a large-capacity electrical energy storage, e.g., Li-ion battery, on optimal sailing routes, speeds, fuel choice, and emission abatement technology selection. Despite rapid cost reduction and performance improvement, current Li-ion chemistries are infeasible for providing the total energy demand for ocean-crossing ships because the energy density is up to two orders of magnitude less than in liquid hydrocarbon fuels. However, limited distance zero-emission port arrival, mooring, and port departure are attainable. In this context, we formulate two groups of numerical problems. First, the well-known Emission Control Area (ECA) routing problem is extended with battery-powered zero-emission legs. ECAs have incentivized ship operators to choose longer distance routes to avoid using expensive low sulfur fuel required for compliance, resulting in increased greenhouse gas (GHG) emissions. The second problem evaluates the trade-off between battery capacity and speed on battery-powered zero-emission port arrival and departure legs. We develop a mixed-integer quadratically constrained program to investigate the least cost system configuration and operation. We find that the optimal speed is up to 50% slower on battery-powered legs compared to the baseline without zero-emission constraint. The slower speed on the zero-emission legs is compensated by higher speed throughout the rest of the voyage, which may increase the total amount of GHG emissions.