Impact of the carbon market on investment benefits of power-grid enterprises in China: a system dynamics analysis

The power grid,as the hub connecting the power supply and consumption sides,plays an important role in achieving carbon neutrality in China.In emerging carbon markets,assessing the investment benefits of power-grid enterprises is essential.Thus,studying the impact of the carbon market on the investment and operation of powergrid enterprises is key to ensuring their efficient operation.Notably,few studies have examined the interaction between the carbon and electricity markets using system dynamics models,highlighting a research gap in this area.This study investigates the impact of the carbon market on the investment of power-grid enterprises using a novel evaluation system based on a system dynamics model that considers carbon-emissions from an established carbon-emission accounting model.First,an index system for benefit evaluation was constructed from six aspects:financing ability,economic benefit,reliability,social responsibility,user satisfaction,and carbon-emissions.A system dynamics model was then developed to reflect the causal feedback relationship between the impact of the carbon market on the investment and operation of power-grid enterprises.The simulation results of a provincial power-grid enterprise analyze comprehensive investment evaluation benefits over a 10-year period and the impact of carbon emissions on the investment and operation of power-grid enterprises.This study provides guidelines for the benign development of power-grid enterprises within the context of the carbon market.

Risk identification and regulatory system design for the carbon market

Currently,the global carbon trading systems are fragmented and belong to different governments or are under the jurisdiction of different regions,resulting in a series of new problems,such as how to link dispersed trading systems,how to compare the emission reduction of various markets and other issues.Since the development of the international carbon market is relatively immature with uncertain life expectancy and volatility during its short history,and there is a lack of quantitative data on the long-term record,the market could provide few risk management tools.Meanwhile,with the launches of China's regional carbon trading pilots in seven provinces since 2013 and combined with the national voluntary emission trading system,carbon trading will become an important mechanism for China in achieving its emission reduction target.In the first stage,the carbon finance market is at least faced with mechanism design risks,market supply risks and compliance risks.Therefore,to secure the development of the carbon market and for public interest,relevant government departments of China should identify the risks facing the market and should make the basic principles and goals,such as ensuring effective trading and pricing mechanisms to avoid fraud and price manipulation,and balancing transparency and confidentiality of information.Consequently,the governments should develop a comprehensive carbon finance regulatory system covering regulatory legislation,regulatory institutions and their authorities,regulatory scope as well as regulatory objects.

Current Situation and Prospects of China's Carbon Market

Through literature review method,this paper systematically analyzes and studies the general situation of China's domestic carbon market,market and technology system,pricing mechanism,trading status,carbon finance,feasible paths for marketing,and development prospects of China's carbon market.This study is of great significance for the systematic understanding of the development of China's carbon market,and also has important reference value for the realization of the national dual-carbon strategy in China.

Activity Data and Emission Factor for Forestry and Other Land Use Change Subsector to Enhance Carbon Market Policy and Action in Malawi

Activity data and emission factors are critical for estimating greenhouse gas emissions and devising effective climate change mitigation strategies. This study developed the activity data and emission factor in the Forestry and Other Land Use Change (FOLU) subsector in Malawi. The results indicate that “forestland to cropland,” and “wetland to cropland,” were the major land use changes from the year 2000 to the year 2022. The forestland steadily declined at a rate of 13,591 ha (0.5%) per annum. Similarly, grassland declined at the rate of 1651 ha (0.5%) per annum. On the other hand, cropland, wetland, and settlements steadily increased at the rate of 8228 ha (0.14%);5257 ha (0.17%);and 1941 ha (8.1%) per annum, respectively. Furthermore, the results indicate that the “grassland to forestland” changes were higher than the “forestland to grassland” changes, suggesting that forest regrowth was occurring. On the emission factor, the results interestingly indicate that there was a significant increase in carbon sequestration in the FOLU subsector from the year 2011 to 2022. Carbon sequestration increased annually by 13.66 ± 0.17 tCO2 e/ha/yr (4.6%), with an uncertainty of 2.44%. Therefore, it can be concluded that there is potential for a Carbon market in Malawi.

Valuation of forest carbon sinks in China within the framework of the system of national accounts

To better promote forest resource management and strengthen the development of forest carbon sink marketization, this paper studied the accounting of forest carbon sinks from 2003 to 2008 based on a system of national accounts （SNA） and data from the latest forest resources inventory in China. The study calculated the value of forest carbon stocks at a total of RMB 817.13 × 10^9 yuan in 2003 and RMB 839.93×10^9 yuan in 2008, with an average annual increase of 0.55 % from an increase in physical carbon sinks. The total value of forest carbon sinks in 2003 and 2008 was RMB 26.73×10^9 yuan and RMB 29.77×10^9 yuan, respectively, with an average annual growth of 2.18 %. From 2003 to 2008, both stock and flow value of forest carbon sinks increased, but the total net flow value of carbon sinks decreased. The growth rate for the environmentally adjusted Gross Domestic Product （eaGDP） for China＇s forest carbon sinks was 17.23 %, outstripping the average growth rate of 9.5 % for the GDP during the same period. The study alsoindicates that China＇s forest carbon sinks affects the GDP in the range of 0.25-0.26 %, and its economic potential is not relatively huge.

Joint electricity and carbon market for Northeast Asia energy interconnection

Decarbonization of the electricity sector is crucial to mitigate the impacts of climate change and global warming over the coming decades.The key challenges for achieving this goal are carbon emission trading and electricity sector regulation,which are also the major components of the carbon and electricity markets,respectively.In this paper,a joint electricity and carbon market model is proposed to investigate the relationships between electricity price,carbon price,and electricity generation capacity,thereby identifying pathways toward a renewable energy transition under the transactional energy interconnection framework.The proposed model is a dynamically iterative optimization model consisting of upper-level and lower-level models.The upper-level model optimizes power generation and obtains the electricity price,which drives the lower-level model to update the carbon price and electricity generation capacity.The proposed model is verified using the Northeast Asia power grid.The results show that increasing carbon price will result in increased electricity price,along with further increases in renewable energy generation capacity in the following period.This increase in renewable energy generation will reduce reliance on carbon-emitting energy sources,and hence the carbon price will decline.Moreover,the interconnection among zones in the Northeast Asia power grid will enable reasonable allocation of zonal power generation.Carbon capture and storage (CCS) will be an effective technology to reduce the carbon emissions and further realize the emission reduction targets in 2030-2050.It eases the stress of realizing the energy transition because of the less urgency to install additional renewable energy capacity.

Factors affecting the pilot trading market of carbon emissions in China

Climate change and carbon emissions are major problems which are attracting worldwide attention. China has had its pilot carbon emission trading markets in seven regions for more than 3 years. What affects carbon emission trading market in China is a big question. More attention is paid to how China promotes the carbon emission trading schemes in the whole country. This paper addresses concerns about the functioning of carbon emission trading schemes in seven pilot regions and takes the weekly data from November 25, 2013, to March 19, 2017. We employ a vector autoregressive model to study how coal price, oil price and stock index have affected the carbon price in China. The results indicate that carbon price is mainly affected by its own historical price; coal price and stock index have negative effects on carbon price, while oil price has a negative effect on carbon price during the first 3 weeks and then has a positive effect on carbon price. More regulatory attention and economic measures are needed to improve market efficiency, and the mechanisms of carbon emission trading schemes should be improved.

Auction mechanism design of the Chinese national carbon market for carbon neutralization

The carbon market auction mechanism is an important policy tool for carbon pricing and a key mechanism that supports carbon emission neutralization,especially for China.A few systematic studies exist on China’s carbon market auction mechanism.This article focuses on the five auction mechanisms in Chinese pilot emission trading schemes(ETS),reviews the structures and bidding situation of the five-pilot auction mechanism,extracts the similarities,and analyzes their different features,such as auction mode,bidding scale,participants,pricing mode,auction frequency,and so on.This study conducts an in-depth analysis of the carbon allowance auction mechanism in the Guangdong pilot ETS of China,including its development and the evolution of the key elements,its operational effects,and related disputes.Finally,this study puts forward the trend forecast and suggestions for the Chinese allowance auction mechanism,such as the time window of launching national allowance auctions,the most likely auction mode,carbon pricing,and bidding revenue management.Carbon pricing by auction is the most powerful policy tool for addressing carbon emissions reduction and implementing the Glasgow Climate Pact.

Cross-correlation analysis of crude oil and new energy markets: A new perspective based on carbon emission market

Taking the return series of the EU carbon allowance price, WTI crude oil price, the European renewable energy index and Shenzhen carbon emission price, Daqing crude oil price, the China securities new energy index as sample data, the multifractal detrend cross-correlation analysis method(MF-DCCA)is used to research the dynamic cross-correlation relationships among the carbon emission market, crude oil market and the new energy market in Europe and China and the source of the multifractality. The empirical analysis shows that the cross-correlations among the carbon emission market, crude oil market and new energy market in Europe and China have all significant multifractal characteristics. Moreover, the multifractal strength of cross-correlation between the carbon emission market and crude oil market is less than that between the carbon emission market and new energy market in Europe. The Chinese market is the opposite. In addition, the multifractal strength of cross-correlation between the crude oil market and new energy market in Europe is more than that between the crude oil market and new energy market in China. It is also found that the long-range correlation of the sequences themselves and the fat-tailed distribution in fluctuations are the common causes of the multifractality, and the fat-tailed in fluctuations distribution contributes more to the multifractals of the series.

Energy and economic impacts of an international multi-regional carbon market

The establishment of a global multi-regional carbon market is considered to be a cost effective approach to facilitate global emission abatement and has been widely concerned.The ongoing planned linkage between the European Union's carbon market and a new emission trading system in Australia in 2015 would be an important attempt to the practice of building up an international carbon market across different regions.To understand the abatement effect of such a global carbon market and to study its energy and economic impact on different market participants,this article adopts a global dynamic computable general equilibrium model with a detailed representation of the interactions between energy and economic systems.Our model includes 20 economic sectors and 19 regions,and describes in detail 17 energy technologies.Bundled with fossil fuel consumptions,the emission permits are considered to be essential inputs in each of the production and consumption activities in the economic system to simulate global carbon market policies.Carbon emission permits are endogenously set in the model,and can be traded between sectors and regions.Considering the current development of the global carbon market,this study takes 2020 as the study period.Four scenarios(reference scenario,independent carbon market scenario,Europe Union(EUh-Australia scenario,and China-EU-Australia scenario) are designed to evaluate the impact of the global carbon market involving China,the EU,and Australia.We find that the carbon price in the three countries varies a lot,from $32/tCO_2 in Australia,to $17.5/tCO_2 in the EU,and to $10/tCO_2 in China.Though the relative emission reduction(3%) in China is lower than that in the EU(9%) and Australia(18%),the absolute emission reduction in China is far greater than that in the EU and Australia.When China is included in the carbon market,which already includes the EU and Australia,the prevailing global carbon price falls from $22 per ton carbon dioxide(CO_2) to $12/tCO_2,due to the relatively lower abatement cost in China.Seventy-one percent of the EU's and eighty-one percent of Australia's domestic reduction burden would be transferred to China,increasing 0.03%of the EU's and 0.06%of Australia's welfare.The emission constraint improves the energy efficiency of China's industry sector by 1.4%,reduces coal consumption by3.3%,and increases clean energy by 3.5%.

Estimation of carbon storage of forest biomass for voluntary carbon markets:preliminary results

Estimating the carbon storage of forests is essential to support climate change mitigation and promote the transition into a low-carbon emission economy.To achieve this goal,voluntary carbon markets(VCMs)are essential.VCMs are promoted by a spontaneous demand,not imposed by binding targets,as the regulated ones.In Italy,only in Veneto and Piedmont Regions(Northern Italy),VCMs through forestry activities were carried out.Valle Camonica District(Northern Italy,Lombardy Region)is ready for a local VCM,but carbon storage of its forests was never estimated.The aim of this work was to estimate the total carbon storage(TCS;t C ha^−1)of forest biomass of Valle Camonica District,at the stand level,taking into account:(1)aboveground biomass,(2)belowground biomass,(3)deadwood,and(4)litter.We developed a user-friendly model,based on site-specifi c primary(measured)data,and we applied it to a dataset of 2019 stands extracted from 45 Forest Management Plans.Preliminary results showed that,in 2016,the TCS achieved 76.02 t C ha^−1.The aboveground biomass was the most relevant carbon pool(48.86 t C ha^−1;64.27%of TCS).From 2017 to 2029,through multifunctional forest management,the TCS could increase of 2.48 t C ha^−1(+3.26%).In the same period,assuming to convert coppices stands to high forests,an additional TCS of 0.78 t C ha^−1(equal to 2.85 t CO 2 ha^−1)in the aboveground biomass could be achieved without increasing forest areas.The additional carbon could be certifi ed and exchanged on a VCM,contributing to climate change mitigation at a local level.

Evaluation on the development degree of China's seven pilot carbon markets

China is preparing to establish a nationwide carbon market in 2017, and in order to facilitate this goal, seven pilot carbon markets have been under study for the past few years. This paper summarizes the operation experience and challenges of the seven pilot carbon markets in China.It has been widely accepted that the essence of a carbon market is to solve environmental problems through market mechanisms, with environmental benefit being the fundamental purpose, market mechanism being the key measure, and policies and regulations being an important guarantee for an orderly carbon market. Therefore, this paper constructs an evaluation index system composed of 34 detailed sub-indexes in three dimensions, such as environmental constraint force, market resource allocation ability, and supporting policies and facility completeness. Through analyzing the operation data from 2013 to 2016, the weights of the sub-indexes are obtained. In addition, the study obtains experts' opinions from over 10 carbon permits exchanges, consultancy firms and research institutions in China, and conducts a comprehensive evaluation on the development degree of the seven pilot carbon markets. Results show that the pilot carbon markets that include private SMEs as the covered entities for emissions control present relatively higher environmental constraint force. But too many covered entities could increase the difficulty of market performance management, while the pilots that include high energy-consuming state-owned enterprises as the entities for emissions control demonstrate a phenomenon of "high market compliance rate with low trading volume". The resource allocation capability of China's carbon market has not been effectively brought into play, and low degree of market participation has become an important constraint factor for market development. Due to the lack of laws and regulations at the national macro-level, the legally binding force of the pilot markets construction is obviously insufficient, and the supporting policies are lacking foresights.Generally, the development of China's pilot carbon markets is still in such a fragmented state as in the aspects of environment, market and policy development, and the market operation has not yet achieved the purpose of solving environmental problems through market mechanisms.Accordingly, policy recommendations pointed out by this study are that tightening the allowance of free quota and progressively increasing the auction proportion, improving legal construction,increasing the services and products of carbon finance and standardizing the order of market transactions, enhancing capacity building of local governments and promoting the participation willingness and capability of emissions control entities, will be necessary.

Feasibility of sustaining the upland conversion program by establishing a domestic carbon market

To sustain the upland conversion program （UCP） in China after the government compensation expires, we suggest an establishment of a domestic carbon market where forest carbon from the UCP can be traded. Taking southwest China＇s Yunnan Province as an example, we explored the feasibility of switching the UCP to a carbon offset project. The breakeven carbon price which is equivalent to the opportunity cost of agricultural cultivation was estimated and then compared with the carbon price in the international market. We found that it is feasible to change the UCP to a carbon offset project if the duration is longer than 10 years at a discount rate of 7%, and if the recent bid price （147.2 Yuan.t-1） for Chinese carbon offset project prevails. The feasibility is better for converted land with lower productivity when the project duration is given. For a given site index, the feasibility is lower as pro- ject length is reduced. The results of sensitivity analysis show that the feasibility will be enhanced as the discount rate increases; however, the changes in the price of agricultural products and the amount of sequestered carbon have insignificant effects on the choice of sites and project duration.

Analysis of factors affecting individual participation in carbon market

China will set up a national carbon emissions trading market by the end of 2017, which is initially open to individual investors from the initial market for business and institutional investors. In this article, the main influencing factors and mechanism of individual participation in carbon trading market are studied by establishing multiple linear regression model. The study found that age,education level, length of account opening time, and risk attitude are the main factors influencing the participation of individual investors. Environmental awareness and environmental impact are less affected; information transparency and transaction risk also have an impact on the degree of individual investor participation; investment experience does not affect the participation of individual investors in the carbon trading market.

Allowance of the Emission Quota Using Life Cycle Assessment for the Creation of a National Carbon Market: Framework Developed for Hydroelectric Projects in Cameroon

The lack of synergy between infrastructure financing mechanisms and mechanisms for combating climate change does not favor the definition of sustainable infrastructure in Cameroon. The definition of a sustainable infrastructure could meet the requirements of these mechanisms, thanks to the control of Greenhouse Gas (GHG) emissions during its installation, in relation to a predefined value. However, the promotion of efforts to reduce emissions from new infrastructures is not subject to a local market. This situation is a limit in the implementation of the policies defined in the Nationally Determined Contribution (NDC). This article proposes a framework for promoting reduction efforts for a national carbon market, in favor of hydroelectric infrastructures. Thanks to the Life Cycle Assessment (LCA) environmental assessment tool, we are going to determine the carbon quota for a specific power. The study carried out on the hydroelectric power station of Mekin (HydroMekin) leads us to a reduction effort of 68.2% compared to the threshold defined at 14.057 gCO2eq/kWhe. The framework, developed, contributes to defining the environmental parameters in the decarbonation strategy during the implementation of new hydroelectric infrastructures and the market carbon design elements special to the construction phase of these infrastructures.

The impact of organizational resources and managerial interpretation on willingness to participate in carbon market

On the basis of resource-based view and managerial cognition,this research aims to explore which and how organizational resources facilitate organizational willingness to participate in carbon market(WTP-CM).In particular,it classifies resources into two dimensions,general resources(GR)and professional resources(PR),and investigates how these two types of resources interact with managerial interpretation and then influence organizational WTP-CM using a sample of 222 Chinese industrial firms.The findings show that environmental talents(PR)and low-carbon technologies(PR)have positive influences on organizational WTP-CM not only directly,but also indirectly through accelerating managers to interpret carbon trading as an opportunity,rather than a threat.On the contrary,only via managerial interpretation can capital reserve(GR)and environmental practices(PR)affect organizational WTP_CM positively.Furthermore,the impact of environmental practices on managerial interpretation does not depend on the performance of environmental practices(i.e.,success or failure).It means,regardless of environmental performance,the cumulation of environmental experience would promote managers to interpret carbon market as an opportunity and then advance their WTP-CM.Last,this partial mediating role of managerial interpretation between organizational resources and WTP-CM varies depending on organizational social position.Compared to centralfirms,peripheralfirms tend to be more responsive to managerial interpretation.The chain from organizational resources,to interpretation of carbon market as an opportunity,andfinally to the willingness to participate is stronger for peripheralfirms than for central ones.

Reflections on the establishment of China's carbon market

A new situation has emerged as a result of global climate change following the "Paris Agreement", which gives rise to new opportunities for carbon market. Carbon market as a mechanism to promote low-carbon development has been explored both in theoretical research and practical application home and abroad for several years. However, there are still many problems to settle, such as the potential uncertainty to determine and distribute total carbon emissions, price distortions in high-carbon products and services in the market, main bodies responsible for the carbon emission in urban infrastructure, etc. All these have formed a constraint on the further development of carbon market. Through the historical analysis of the actual development of the carbon market, this paper tries to identify practical problems which should be solved urgently, and provides ideas for China to establish a unified national carbon market in 2017, which is not only the national measures to participate in the "Paris Agreement" actively, but also the implementation of China's sustainable development strategy.

Voluntary Carbon Market in Turkey

Nowadays, global warming is a major environmental concern. Climate change is dominating the environmental agendas, especially in developed countries at first, but by now, around the world. Several initiatives have been undertaken to reduce the effect of increasing atmospheric GHGs （greenhouse gasses） concentrations. Emerging carbon emissions trade under the Kyoto Protocol serves to market the carbon quotas among the countries, thus, it helps to increase their level of GNP （gross national product）. Emissions trade is being performed in the voluntary and compliant markets. Increasing interest in emission trade emerged carbon and energy exchanges markets in the world. Turkey is located in the voluntary markets, and organizations buying carbon offset credits in order to achieve their voluntary emission reduction goals. GS （gold standard） and VCS （verified carbon standard） are mainly being used to finance renewable energy projects in Turkey. In the GS, there are 209 projects which are currently in the approval process or in the application, such as wind energy, hydroelectric power plant and biogas energy production. In addition to these, in the VCS, there are 61 projects which are mainly energy industries, in the approval process or in the application. Most environmental issues require long-term plans which include international cooperation, especially climate change. The Kyoto Protocol marks the beginning of a new era to combat global climate change. Voluntary markets are very popular and forty percent of the total global GS projects and around nine percent of VCS projects are implemented in Turkey. These projects are initial steps for future implementations of compliant markets in Turkey.

Assessing the maturity of China's seven carbon trading pilots

Indicators based on the developed version of the Capability Maturity Model were set up to access the maturity degree of China's seven pilot carbon markets from 2013 to 2017. Results show that the maturity degree of Shenzhen and Beijing pilot carbon markets ranks first;while those of Guangdong, Hubei, and Shanghai rank second. Tianjin and Chongqing rank lowest. Most of pilot markets failed to perform well on price efficiency except Shenzhen. There is significant disparity in the scores that the pilot carbon markets got, with a range from 9 to 73. The drivers to maintain market maturity is different among the pilot markets, either with a good performance on market structure, scale, or efficiency could lead to a certain score. Much could be done to increase the maturity level of the carbon market. Further downscaling the firm size, raising the legislation level, and increasing the participation of the third party entities may help the carbon market to grow healthier.

The Status Quo and Developing Trend Analysis of Global Carbon Finance

This paper gives a systematic view of the new trends of global carbon finance innovation under the challenge of global climate change and in the process of transition to achieve economic growth from "high carbon" to 'low carbon",covering the following aspects:the structure,status quo and developing trend of global carbon market.The paper discusses the innovation in financial organization and service systems and governments' overall guidance and policy support,and draws the conclusion that the world is undergoing massive changes with governments actively responding to carbon finance to embrace the tremendous opportunities for clean energy and climate change in financial industry.To seize the opportunity,a complete and overall carbon finance system of China should be put in the top of the agenda.Given the current tasks of energy conservation and pollution reduction and the growing demand for capital input,China needs to construct an clear of policy guidance,a diversified financia service system,and a multi-approach carbon finance system to intensify and widen the participation of financial industry,to expand financing channels for sustainable economy and spread risks,and finally,work out an inexpensive solution to the realization of China's low carbon target.