Optimizing the rolling out plan of China's carbon market

Ke Wang; Zhixin Wang; Yujiao Xian; Xunpeng Shi; Jian Yu; Kuishuang Feng; Klaus Hubacek; Yi-Ming Wei

doi:10.1016/j.isci.2022.105823

Optimizing the rolling out plan of China's carbon market

iScience. 2022 Dec 17;26(1):105823. doi: 10.1016/j.isci.2022.105823. eCollection 2023 Jan 20.

Authors

Ke Wang^{1

2

3

4}, Zhixin Wang², Yujiao Xian⁵, Xunpeng Shi⁶, Jian Yu⁷, Kuishuang Feng⁸, Klaus Hubacek⁹, Yi-Ming Wei^{1

2

3

4}

Affiliations

¹ Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, China.
² School of Management and Economics, Beijing Institute of Technology, Beijing, China.
³ Sustainable Development Research Institute for Economy and Society of Beijing, Beijing, China.
⁴ Beijing Key Lab of Energy Economics and Environmental Management, Beijing, China.
⁵ School of Management, China University of Mining and Technology (Beijing), Beijing, China.
⁶ Australia-China Relations Institute, University of Technology Sydney, Ultimo, NSW, Australia.
⁷ School of Economics, Central University of Finance and Economics, Beijing, China.
⁸ Department of Geographical Sciences, University of Maryland, College Park, MD, USA.
⁹ Integrated Research on Energy, Environment and Society (IREES), Energy and Sustainability Research Institute Groningen, University of Groningen, Groningen, the Netherlands.

Abstract

Although China has developed the world's largest carbon emissions trading scheme (ETS), there is no official documentation explaining how the current sectoral coverage plan was determined and what sectoral rollout plan is preferred. Here, we contribute to the policy development of the world's largest carbon market by suggesting a priority list of industries be covered in the ETS. We estimated marginal abatement cost curves using a database of more than two million firms covering over 500 four-digit industries that account for more than 97% of total industrial emissions, and simulating various carbon market scenarios including thermal power, 13 designated, and an additional 50 industries that have high emissions or are covered in other ETSs. Our analysis suggests that the cement industry should be the next sector to be included in China's ETS. In our revised list, the average abatement cost can be reduced by 39.5-78.3% compared with the business-as-usual scenario.

Keywords: Energy Modeling; Energy management; Energy policy; Energy resources.