Understanding the Interactions between Emissions Trading Systems and Renewable Energy Standards Using a Multi-Regional CGE Model of China

39 Pages Posted: 4 Aug 2017

See all articles by Ying Fan

Ying Fan

Beihang University (BUAA)

Jie Wu

Shanghai University of Finance and Economics

Govinda R. Timilsina

World Bank - Development Research Group (DECRG)

Xiaoguang Yang

Chinese Academy of Sciences (CAS)

Date Written: August 3, 2017

Abstract

Many countries have introduced policy measures, such as carbon pricing, greenhouse gas offsetting mechanisms, renewable energy standards, and energy efficiency improvements, to achieve their climate change mitigation targets. However, in many instances, these measures overlap in ways that may dilute each policy's greenhouse gas reduction potential. This study examines how a renewable energy standard in the power sector would interact with a national emission trading scheme that is introduced to achieve a greenhouse gas mitigation target. Using a static, multiregional computable general equilibrium model of China to simulate policy measures, the study finds that the addition of a separate renewable energy standard policy would increase the economic cost for achieving a target level of greenhouse gas mitigation. The study concludes that although renewable energy standard policies promote the use of renewable energies, they are an economic burden from the perspective of reducing greenhouse gas emissions if a carbon pricing mechanism is in place.

Keywords: Climate Change Mitigation and Green House Gases, Climate Change and Environment, Social Policy, Environmental & Natural Resources Law, Science of Climate Change, Legal Products, Environmental Strategy, Climate Change and Health, Legislation, Environmental Management, Regulatory Regimes, Judicial System Reform, Carbon Policy and Trading, Legal Reform

Suggested Citation

Fan, Ying and Wu, Jie and Timilsina, Govinda R. and Yang, Xiaoguang, Understanding the Interactions between Emissions Trading Systems and Renewable Energy Standards Using a Multi-Regional CGE Model of China (August 3, 2017). World Bank Policy Research Working Paper No. 8159. Available at SSRN: https://ssrn.com/abstract=3013434

Ying Fan (Contact Author)

Beihang University (BUAA) ( email )

37 Xue Yuan Road
Beijing 100083
China

Jie Wu

Shanghai University of Finance and Economics

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Govinda R. Timilsina

World Bank - Development Research Group (DECRG) ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

Xiaoguang Yang

Chinese Academy of Sciences (CAS) ( email )

52 Sanlihe Rd.
Datun Road, Anwai
Beijing, Xicheng District 100864
China

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