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A general equilibrium analysis on the impacts of regional and sectoral emission allowance allocation at carbon trading market

Zhongjue, Y; Geng, Y; Dai, H; Wu, R; Liu, Z; Tian, X; Bleischwitz, R; (2018) A general equilibrium analysis on the impacts of regional and sectoral emission allowance allocation at carbon trading market. Journal of Cleaner Production , 192 pp. 421-432. 10.1016/j.jclepro.2018.05.006. Green open access

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Abstract

It is critical to adapt to climate change and reduce the overall carbon emissions. China announced its Nationally Determined Contributions (NDC) at the Paris climate conference in 2015. The carbon cap-and trade scheme, which plays a key role in carbon emissions abatement, is an effective policy for China to achieve its NDC. This study focuses on the allocation of regional and sectoral initial carbon emission allowances in Shanghai. An impact evaluation on the macro-economy, carbon trading markets and participating sectors for the year 2030 was conducted by applying a computable general equilibrium (CGE) model. The results show that the carbon cap-and-trade scheme would cause a 3.4% GDP loss and an 8.9% welfare loss in 2030. The carbon price would be 161.2 USD/t and 147.2 USD/t under the two representative scenarios. The allocation of initial allowances would have a significant impact on both carbon market scale and sectoral trading behaviors. The power generation sector and the petrol oil sector would undertake the greatest output loss, while the metal smelting sector would become the main seller. Furthermore, the initial allowances allocation under a certain abatement target would hardly affect sectoral production but remarkably affect trade behaviors at the carbon trading markets.

Type: Article
Title: A general equilibrium analysis on the impacts of regional and sectoral emission allowance allocation at carbon trading market
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jclepro.2018.05.006
Publisher version: http://dx.doi.org/10.1016/j.jclepro.2018.05.006
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: emissions trading scheme, allowance allocation, Computable general equilibrium model, Urban Governance, Shanghai
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources
URI: https://discovery.ucl.ac.uk/id/eprint/10048455
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