Rolling Decision Model of Thermal Power Retrofit and Generation Expansion Planning Considering Carbon Emissions and Power Balance Risk

With the increasing urgency of the carbon emission reduction task,the generation expansion planning process needs to add carbon emission risk constraints,in addition to considering the level of power adequacy.However,methods for quantifying and assessing carbon emissions and operational risks are lacking.It results in excessive carbon emissions and frequent load-shedding on some days,although meeting annual carbon emission reduction targets.First,in response to the above problems,carbon emission and power balance risk assessment indicators and assessment methods,were proposed to quantify electricity abundance and carbon emission risk level of power planning scenarios,considering power supply regulation and renewable energy fluctuation characteristics.Secondly,building on traditional two-tier models for low-carbon power planning,including investment decisions and operational simulations,considering carbon emissions and power balance risks in lower-tier operational simulations,a two-tier rolling model for thermal power retrofit and generation expansion planning was established.The model includes an investment tier and operation assessment tier and makes year-by-year decisions on the number of thermal power units to be retrofitted and the type and capacity of units to be commissioned.Finally,the rationality and validity of the model were verified through an example analysis,a small-scale power supply system in a certain region is taken as an example.The model can significantly reduce the number of days of carbon emissions risk and ensure that the power balance risk is within the safe limit.

Carbon emission trading system and stock price crash risk of heavily polluting listed companies in China:based on analyst coverage mechanism

This study reveals the inconsistencies between the negative externalities of carbon emissions and the recognition condition of accounting statements.Hence,the study identifies that heavily polluting enterprises in China have severe off-balance sheet carbon reduction risks before implementing the carbon emission trading system(CETS).Through the staggered difference-in-difference(DID)model and the propen-sity score matching-DID model,the impact of CETS on reducing the risk of stock price crashes is examined using data from China’s A-share heavily polluting listed companies from 2007 to 2019.The results of this study are as follows:(1)CETS can significantly reduce the risk of stock price crashes for heavily polluting companies in the pilot areas.Specifically,CETS reduces the skewness(negative conditional skewness)and down-to-up volatility of the firm-specific weekly returns by 8.7%and 7.6%,respectively.(2)Heterogeneity analysis further shows that the impacts of CETS on the risk of stock price crashes are more significant for heavily polluting enterprises with the bear market condition,short-sighted management,and intensive air pollution.(3)Mechanism tests show that CETS can reduce analysts’coverage of heavy polluters,reducing the risk of stock price crashes.This study reveals the role of CETS from the stock price crash risk perspective and helps to clarify the relationship between climatic risk and corporate financial risk.

The price of carbon risk:Evidence from China's bond market

Using a 2009–2019 sample of Chinese bond issuers,we examine the effect of carbon risk on bond financing costs.Relative to low carbon risk issuers,high carbon risk issuers have substantially larger bond credit spreads,mainly because their credit risk is greater and they invest the funds in non-green projects.This positive relationship is more pronounced for issuers with financing constraints,those not making a green transition and those in cities with stringent environmental regulations.We find a reversed effect during the COVID-19 pandemic.However,China’s carbon peak and carbon neutral goals have renewed the focus on carbon risk.Carbon risk also causes bond issuers to scale back production and negatively affects their likelihood of receiving long-term financial support.Our findings suggest that investors consider carbon risk and charge a corresponding risk premium.

Carbon Emission Risk and Governance

Within the hazard and disaster risk research field, explicitly treating carbon emissions as a hazard remains rather nascent. Applying hazard and disaster risk research perspectives to seek new insights on integrated mitigation and adaptation approaches and policy measures is equally elusive. Since China’s pledge to achieve carbon neutrality by 2060, the ‘‘dual carbon” goals of carbon emission peaking and neutrality have stimulated nationwide attention, research, and policies and action plans.How to ensure that the transition pathways are on track and well-contextualized is one of the crucial challenges for policymakers and practitioners. This article examines the‘‘risks” of missing the carbon neutrality goal at a regional scale in China, denoted as Carbon Emission Risk(CER).Carbon emissions(CE) as hazard, combined with the human socioeconomic system as exposure and human living environment, constitute the regional carbon emission environmental risk system. The ‘‘risks” of missing(or achieving) the carbon neutrality target for any region at any time, the article argues, is essentially determined by the ratio of CE to carbon absorption(CA, for uptake and removal). These variables are modified by a broadly defined ‘‘vulnerability coefficient”(Cv) that embodies both the potential for changes(decreasing CE and increasing CA), and the uncertainties of measuring CE and CA. Thus,the ratio of CE to CA is a measure of reality at any moment of time, whereas Cv indicates the overall propensity or capacity for moving the CE/CA ratio towards 1, that is,realizing carbon neutrality. Based on our calculation, CER at the provincial level in eastern China is higher than in western China. The article also calls for strengthening CER research and summarizes key measures for carbon emission risk governance.

Firms and climate change:a review of carbon risk in corporate finance

This paper provides an overview of financial economics-based research on carbon risk with an emphasis on corporate finance.In the corporate finance literature,carbon risk refers to the impact of society’s transition to a lowcarbon economy on firm value due to tightening regulations,changing consumer preferences,reputational damage,etc.We focus on the links between carbon risk and different firm performance factors,such as firm risk,cost of capital,financial performance,firm value,and corporate decisions.Although research on carbon risk is still emerging in the corporate finance field,the amount of literature on this topic has been increasing,especially in the last 2 years.We find that some results are robust,while others are mixed.This indicates that conflicting hypotheses still exist,leading to a need for more in-depth exploration.

International Experience, China's Development and Prospect of Carbon Market Construction

Carbon market,which is capable of scientific quantifying and marked-based pricing of carbon emission,is an important way for countries to achieve the target of carbon emission reduction.The global carbon market,after more than ten years of development,has developed a mature mechanism.China started the trial of carbon market in 2011.After ten years of exploration,the national carbon trading market was officially launched in mid-July 2021.Against the backdrop of carbon neutrality,the national carbon market will shoulder a greater mission of carbon emission reduction and speed up its financialization and internationalization.However,it should take a dialectical attitude toward the opportunities and risks of carbon market financialization.In the future,China can promote the development of carbon market through efforts to develop market participants,clarify the attributes of carbon finance,prevent potential risks of carbon finance,improve the connection mechanism with the international carbon market,and innovate carbon finance services.