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Impacts of strategic behavior in regional coalitions under the sectoral expansion of the carbon market in China
https://orcid.org/http://orcid.org/0000-0001-5650-3748
With the acceleration of the global response to climate change, increasing attention has been paid to the risks associated with climate change mitigation, such as regulation uncertainties and market interactions. As the country with the greatest CO2 emissions globally, China has launched a national carbon market to speed up its climate mitigation. While the national carbon market provides a platform for regional coalitions to reduce emissions, its incomplete sectoral coverage might allow for the strategic behavior of industries in different regions and ultimately affect the efficiency of the carbon market. This paper explores how the sectoral expansion of the national carbon market affects regional emission reductions in China when emissions trading sectors engage in strategic behavior in the output market. From the sectoral perspective, our numerical results show that the strategic effect in the electricity and steel sectors is more significant than in other sectors. From a regional perspective, the western regions of China, which are mostly permit sale regions, have less strategic power than the eastern regions in the output and carbon markets. Finally, this paper suggests that measures, such as the dynamic adjustment of emission allowance allocation, should be considered by policy makers to prevent the widening of regional economic disparities when extending the sectoral coverage of the carbon market in China.
Impacts of strategic behavior in regional coalitions under the sectoral expansion of the carbon market in China
https://orcid.org/http://orcid.org/0000-0001-5650-3748
With the acceleration of the global response to climate change, increasing attention has been paid to the risks associated with climate change mitigation, such as regulation uncertainties and market interactions. As the country with the greatest CO2 emissions globally, China has launched a national carbon market to speed up its climate mitigation. While the national carbon market provides a platform for regional coalitions to reduce emissions, its incomplete sectoral coverage might allow for the strategic behavior of industries in different regions and ultimately affect the efficiency of the carbon market. This paper explores how the sectoral expansion of the national carbon market affects regional emission reductions in China when emissions trading sectors engage in strategic behavior in the output market. From the sectoral perspective, our numerical results show that the strategic effect in the electricity and steel sectors is more significant than in other sectors. From a regional perspective, the western regions of China, which are mostly permit sale regions, have less strategic power than the eastern regions in the output and carbon markets. Finally, this paper suggests that measures, such as the dynamic adjustment of emission allowance allocation, should be considered by policy makers to prevent the widening of regional economic disparities when extending the sectoral coverage of the carbon market in China.
Impacts of strategic behavior in regional coalitions under the sectoral expansion of the carbon market in China
https://orcid.org/http://orcid.org/0000-0001-5650-3748
With the acceleration of the global response to climate change, increasing attention has been paid to the risks associated with climate change mitigation, such as regulation uncertainties and market interactions. As the country with the greatest CO2 emissions globally, China has launched a national carbon market to speed up its climate mitigation. While the national carbon market provides a platform for regional coalitions to reduce emissions, its incomplete sectoral coverage might allow for the strategic behavior of industries in different regions and ultimately affect the efficiency of the carbon market. This paper explores how the sectoral expansion of the national carbon market affects regional emission reductions in China when emissions trading sectors engage in strategic behavior in the output market. From the sectoral perspective, our numerical results show that the strategic effect in the electricity and steel sectors is more significant than in other sectors. From a regional perspective, the western regions of China, which are mostly permit sale regions, have less strategic power than the eastern regions in the output and carbon markets. Finally, this paper suggests that measures, such as the dynamic adjustment of emission allowance allocation, should be considered by policy makers to prevent the widening of regional economic disparities when extending the sectoral coverage of the carbon market in China.
Impacts of strategic behavior in regional coalitions under the sectoral expansion of the carbon market in China
Sustain Sci
Wu, Jie (author) / Xia, Yan (author) / Voigt, Sebastian (author)
Sustainability Science ; 17 ; 1767-1779
2022-09-01
13 pages
Article (Journal)
Electronic Resource
English
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