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GTAP Resource #4048

"Integrating Regional Pilot Carbon Markets in China – a Bottom-up CGE Analysis on the Impact of Linking Carbon Markets between Hubei and Guangdong"
by Yu, Liu, Cai Songfeng and Yaxiong Zhang

The control of greenhouse gas emissions is an important task for China to actively respond to global climate change. For the target that the emission intensity in 2015 decrease by 17% than 2010, China plans to upgrade its forthcoming pilot carbon emission trading schemes to nation-wide scheme from 2015 onwards. Therefore, we use the Chinese multi-regional general equilibrium model (TermCo2) to simulate the impact of linking two pilot markets, namely Hubei and Guangdong. We assume that each province’s ETS is responsible for achieving an absolute abatement level that is comparable to their respective provincial intensity-based emissions reduction targets. The study found that carbon trading can reduce the carbon abatement costs of the entire region. In the separate emissions reduction, the carbon tax of Guangdong and Hubei are respectively 102.9 Yuan/ton and 14.8 Yuan/ton, the average cost of regional emissions reduction is 972.4 Yuan/ton. After the inter-provincial carbon trading, the regional carbon tax is only 35.9 Yuan/ton, the average cost of regional emissions reduction goes down to 567.9 Yuan/ton. We also find that a link between Hubei and Guangdong’s carbon markets improves the combined welfare for the two provinces as well as for the nation. The link will also lead to a fall in the national carbon intensity of GDP. Our simulation results also show that Hubei will be worse off in a linked carbon market with Guangdong comparing with the scenario in which the province adopts an ETS by itself, and the opposite will be true for Guangdong. From the industry point of view, electricity, non-metallic mineral products, non-metallic mining and dressing industry, metal smelting and rolling processing and the chemical industry sectors with high emission intensity will suffer a larger impact, services and other tertiary industry less impact. Based on the simulation exercise we recommend the upgrade to a nation-wide scheme should be gradual and that it should be subjec...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Yu, L. (3/10/2013)
Updated: Batta, G. (3/11/2013)
Visits: 1,392
- Climate impacts
- Asia (East)

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