An intertemporal carbon emissions trading system with cap adjustment and path control

Jiang, Minxing; Zhu, Bangzhu; Wei, Yi‐Ming; Chevallier, Julien; He, Kaijian

doi:10.1016/j.enpol.2018.07.025

Cited by 13 publications

(7 citation statements)

References 27 publications

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“…Second, game models were used to describe the relationship between the conflicting agents of the government (the ETS supervisor attempting to reduce the emissions [101], which would increase enterprises' production costs [101]) and enterprises (the ETS targets aiming to reduce production cost [103] and increase profits [101][102][103]) under an ETS, to find a reasonable design for obtaining mutually satisfactory results (in terms of Nash equilibrium). Third, a variety of linear or nonlinear programming models have been built to find an optimal ETS-related rule (e.g., carbon cap [104]) to minimize the system cost [16,22] or maximize the profit [101,103], under given levels of emissions [91], technology [22], etc.…”

Section: Quantitative Modelsmentioning

confidence: 99%

Quantitative models in emission trading system research: A literature review

Tang

Wang

et al. 2020

Renewable and Sustainable Energy Reviews

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Diverse quantitative models have been applied to analyse emission trading system, as the top effective climate change policy. This paper is the first attempt to present a comprehensive literature review on full-scale types of quantitative models in emission trading system research. The models dominating emission trading system-related literature could be categorized as optimization models, simulation models, assessment models, statistical models, artificial intelligences and ensemble models. Using different quantification and solution tools, these models complemented and enriched each other in serving the various agents involved in emission trading system and facilitating their respective emission trading system related works: the government to design emission trading system policies, enterprises to participate in emission trading system and goods markets, third parties to regulate emission trading system and emission trading system markets involving different agents. For each agent, a systematic analysis is provided on research hotspots (the challenges to address), quantitative models (to describe the problems and find the results), main findings (the policy implications from the models) and future research (potential improvements on existing models). Some interesting conclusions are obtained. (1) Generally, China was the largest contributor to emission trading system research using quantitative models (representing 35.71% of the total articles). (2) The research hotspots were decision making by enterprises under an emission trading system (20.92%), spillovers amongst emission trading system and other markets (17.54%) and allowance allocation by the government (12.52%). (3) Popular quantitative models included various optimization models (32.00%) and simulation models (29.64%). Highlights：• A variety of quantitative models have been applied to ETS research.• A comprehensive review on full-scale types of models in ETS research is presented.• Optimization, simulation, assessment, statistical, AI & ensemble models were built.• Models helpfully served the government, enterprises, third parties & market in ETS.• For each agent, hotspots, models, main findings and future research are analysed.

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Section: Quantitative Modelsmentioning

confidence: 99%

Quantitative models in emission trading system research: A literature review

Tang

Wang

et al. 2020

Renewable and Sustainable Energy Reviews

View full text Add to dashboard Cite

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“…Expecting a change in policy or exogenous factors in the future, their current decisions would respond rationally, so as to prepare for the future changes. Some studies have already emphasized the importance of intertemporal decisions in climate policy analysis (e.g., Jin [16], Jiang et al [17]). Models without such a setting have been regarded as being subject to the Lucas critique [18].…”

Section: E-dsge Modelsmentioning

confidence: 99%

“…The firm maximizes the above profit function by choosing labor L i,t (h), capital K i,t−1 (h), and abatement effort U i,t (h), subject to the constraints (12), (13), (15) and (17). As stated in (18), the only source of firms' income comes from the revenue P i,t (h)Y i,t (h), while the total variable cost includes…”

Section: Using the Budget Constraintmentioning

confidence: 99%

Optimal Environmental Tax Rate in an Open Economy with Labor Migration—An E-DSGE Model Approach

Chan

2019

Sustainability

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Recent research has started to apply environmental dynamic stochastic general equilibrium (E-DSGE) models for climate policy analysis. However, all of the studies assume a closed economy setting, where there is no interaction of the economy with an outside economy; this paper fills the gap by constructing a two-city E-DSGE model that features labor migration. With the model, we solve for the optimal environmental tax rate determined by a Ramsey social planner, who maximizes household utility and takes into account the policy’s impact on labor migration. We find the following. (i) The optimal environmental tax rate should be more volatile and procyclical than the rates predicted in the aforementioned literature. (ii) In the closed economy setting, a higher environmental tax rate would always dampen production, while in our setting, it could stimulate output through deterring labor outflow and attracting labor inflow. (iii) We complement the existing literature by emphasizing that the optimal environmental tax rate in a city should respond not only to the shocks that occur internally, but also to those that occur in the opponent city. In particular, we find that it is optimal to reduce the environmental tax rate if a positive total factor productivity (TFP) shock occurs in the neighbor city.

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“…Jiang et al found that generally the social optimum will not be touched in the cap-and-trade system, if the emission allocation of enterprises is lower than the optimal level. Finally, they proposed a hybrid quantity-price policy to help firms control quantity effectively [16]. Cao found the increasing of carbon trading price will lead to the increasing of carbon emission reduction.…”

Section: Supply Chain Operation Decisions Under Cap-and-trade Policymentioning

confidence: 99%

Profit Distribution Model for Construction Supply Chain with Cap-and-Trade Policy

Jiang

2019

Sustainability

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Cap-and-trade has become one of the most widely used carbon emission limitation methods in the world. Its constraints have a great impact on the carbon emission reduction decisions and production operations of supply chain enterprises, as well as profit distribution. In the construction supply chain, there are few studies on the profit distribution and emission reduction decisions considering cap-and-trade policy. This paper investigates the profit distribution model of a two-echelon construction supply chain consisting of a general contractor and a subcontractor with cap-and-trade policy. Using game theory and Shapley value method, the optimal emission reduction decisions and profit distribution under three cooperation modes of pure competition, co-opetition, and pure cooperation are obtained, respectively. The research shows that the profits of the construction supply chain are increasing in pure competition, co-opetition, and pure cooperation scenarios, and the emission reduction amount of the construction supply chain in the case of pure cooperation is greater than that of pure competition and co-opetition. The carbon emission reduction amount under the co-opetition scenario is not always greater than that under the pure competition scenario, which depends on the emission reduction cost coefficient relationship of general contractor and subcontractor. When the cost coefficient of emission reduction of the general contractor is less than that of the subcontractor, the emission reduction amount under pure competition is larger than that under co-opetition. A numerical study is carried out to verify the conclusions and illustrated the profits of the supply chain decreased with the increase of carbon emission reduction cost coefficient, and had nothing to do with the emission reduction efficiency of enterprises.

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An intertemporal carbon emissions trading system with cap adjustment and path control

Cited by 13 publications

References 27 publications

Quantitative models in emission trading system research: A literature review

Quantitative models in emission trading system research: A literature review

Optimal Environmental Tax Rate in an Open Economy with Labor Migration—An E-DSGE Model Approach

Profit Distribution Model for Construction Supply Chain with Cap-and-Trade Policy

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