The energy price equivalence of carbon taxes and emissions trading—Theory and evidence

Chiu, Fan-Ping; Kuo, Hsiao-I; Chen, Chi‐Chung; Hsu, Chia-Sheng

doi:10.1016/j.apenergy.2015.09.022

Cited by 74 publications

(24 citation statements)

References 32 publications

(43 reference statements)

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“…There are two main types of emissions reduction policies based on market mechanisms: carbon tax policy and Emissions Trading Scheme (ETS) [5]. The former is characterized by price control [6], and the latter is characterized by total amount control [7], both of which can influence the market by use of price leverage [8]. Against this backdrop, the Chinese government drew on foreign experience and gradually carried out the ETS and carbon tax.…”

Section: Introductionmentioning

confidence: 99%

Marginal Abatement Cost of CO2 in China Based on Directional Distance Function: An Industry Perspective

Xiao

Niu

et al. 2017

Sustainability

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Industrial sectors account for around 70% of the total energy-related CO 2 emissions in China. It is of great importance to measure the potential for CO 2 emissions reduction and calculate the carbon price in industrial sectors covered in the Emissions Trading Scheme and carbon tax. This paper employs the directional distance function to calculate the marginal abatement costs of CO 2 emissions during 2005-2011 and makes a comparative analysis between our study and the relevant literature. Our empirical results show that the marginal abatement costs vary greatly from industry to industry: high marginal abatement costs occur in industries with low carbon intensity, and vice versa. In the application of the marginal abatement cost, the abatement distribution scheme with minimum cost is established under different abatement targets. The conclusions of abatement distribution scheme indicate that those heavy industries with low MACs and high carbon intensity should take more responsibility for emissions reduction and vice versa. Finally, the policy implications for marginal abatement cost are provided.

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Section: Introductionmentioning

confidence: 99%

Marginal Abatement Cost of CO2 in China Based on Directional Distance Function: An Industry Perspective

Xiao

Niu

et al. 2017

Sustainability

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“…8,9 For instance, the UK has participated in EU ETS since 2005 while a carbon price floor to tax on fossil fuels used for power generation, at US$ 15.75 per ton of CO 2 emission, was introduced in 2013. 5 A similar situation has also taken place in Japan and other countries. China has not imposed special taxes on carbon dioxide emissions but discussion about this has been continuing for a long time.…”

Section: Introductionmentioning

confidence: 54%

“…The implementation of carbon taxes and emissions trading in different countries has been analyzed by several studies . For instance, the UK has participated in EU ETS since 2005 while a carbon price floor to tax on fossil fuels used for power generation, at US$ 15.75 per ton of CO 2 emission, was introduced in 2013 . A similar situation has also taken place in Japan and other countries.…”

Section: Introductionmentioning

confidence: 99%

“…The biggest advantage of implementing emissions trading is to ensure that essential reductions in GHG emissions targets are met at the lowest possible cost. 5 On the other hand, carbon tax, as a 'price-based' policy instrument, is an excise that deals with carbon-based fuel consumption. 6 Some countries in Europe, such as the Netherlands, Sweden, Finland, and Norway, have implemented carbon taxes for several years.…”

Section: Introductionmentioning

confidence: 99%

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Optimal design of carbon tax to stimulate CCS investment in China's coal‐fired power plants: A real options analysis

Zhang

2018

Greenhouse Gases

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Carbon tax is an important policy instrument to control greenhouse gases. How to design a suitable carbon tax rate is of significance for policy makers. This study aims to address this issue from a microeconomic perspective by exploring the decision behavior of a potential investor. A trinomial tree model based on real options theory is presented to evaluate carbon capture and storage (CCS) investment in coal‐fired power plants considering uncertain factors. The model is then applied to a case study and the main findings are as follows: (1) carbon tax policy will have a positive effect on the CCS investment. If the carbon price is not high enough to trigger CCS investment, a hybrid mechanism integrating carbon trading and carbon tax to stimulate CCS investment is required; (2) in applying the trinomial tree real options model, the optimal carbon tax rate should be 145.3 RMB/ton for supercritical pulverized coal (SCPC) (or 79.54 RMB/ton for integrated gasification combined cycle (IGCC)) plants under current market condition and at current technological levels; (3) the optimal carbon tax rate is sensitive to uncertainties. Specifically, the optimal tax rate depends largely on not only the cost of the CCS investment but also the portfolio of carbon price volatility and the initial carbon price level. These conclusions provide the theoretical foundations for decision making regarding CCS investment and related policy making. © 2018 Society of Chemical Industry and John Wiley & Sons, Ltd.

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“…Which will have a better effect in ESER system, carbon tax or carbon trading? The key is to find suitable measures to reduce carbon emissions according to the actual situation of the corresponding district (city) [33]. For some districts (cities), carbon tax is better suited for the development of ESER to a certain degree.…”

Section: Introductionmentioning

confidence: 99%

Investigating carbon tax pilot in YRD urban agglomerations—Analysis of a novel ESER system with carbon tax constraints and its application

Fang

et al. 2017

Applied Energy

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The energy price equivalence of carbon taxes and emissions trading—Theory and evidence

Cited by 74 publications

References 32 publications

Marginal Abatement Cost of CO2 in China Based on Directional Distance Function: An Industry Perspective

Marginal Abatement Cost of CO2 in China Based on Directional Distance Function: An Industry Perspective

Optimal design of carbon tax to stimulate CCS investment in China's coal‐fired power plants: A real options analysis

Investigating carbon tax pilot in YRD urban agglomerations—Analysis of a novel ESER system with carbon tax constraints and its application

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