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Renewable energy

Long-term Impact of Carbon Emission Trading and Renewable Energy on China's Power Sector

Strategic Insights

— 1 min read

A study published in Environment, Development and Sustainability reveals that carbon emissions trading (CET) and renewable energy support policies are crucial for the low-carbon transition of China's power sector. The research, led by Wang Yue from the Chengdu University of Technology, employed a system dynamics framework to examine the long-term effects of these policies on China's power sector. The findings suggest that a well-balanced portfolio of CET and renewable energy support policies is necessary for lower policy implementation costs, enhanced renewable energy deployment, and long-term development of China's power sector.

Key Takeaways:

  • The study found that carbon emissions trading (CET) is the most effective mitigation mechanism, with the scenario featuring CET alone achieving the lowest carbon emissions of 843 million tons in 2060.
  • Renewable energy policies accelerate the deployment of wind and solar power, with feed-in tariffs exerting a stronger influence in the early stages, while renewable portfolio standards become more effective in the middle and later stages.
  • Market-based pricing mechanisms facilitate the phase-out of thermal power plants more effectively than benchmark pricing, and when combined with CET, more deployment of carbon capture and storage (CCS) is observed.
  • The study showed that under market-based mechanisms, electricity prices exhibit an inverted 'N' shape.
  • The findings highlight the necessity of a well-balanced portfolio of CET and renewable energy support policies for the long-term development of China's power sector.
  • The research has been peer-reviewed and published in Environment, Development and Sustainability.

Statistics:

  • 843 million tons: The lowest carbon emissions achieved in 2060 under the scenario featuring CET alone.
  • 2025: The year the study was published.
  • 2060: The year in which the lowest carbon emissions were achieved under the scenario featuring CET alone.
  • 30%: The proportion of renewable electricity in the power mix under the scenario featuring CET and renewable energy support policies.
  • 2030: The year in which China aims to peak its carbon emissions.

Sources:

  • The Long-term Impact of Carbon Emission Trading and Renewable Energy Support Policy On China's Power Sector Under the Context of Electricity Marketed Reform: an Analysis Based On System Dynamics. Environment, Development and Sustainability, 2025.

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