Volume 1: Energy Innovations: Accelerated Deployment, New Concepts, and Emerging Technologies

An Agent-Based Analysis of the Impact of Carbon Emission Trading on Power Sector: Prospects of China’s Low-Carbon Electricity Hongyang Zou, Huibin Du, Gang He

Abstract

In 2018, the Chinese government takes power sector as the first polit of nationwide carbon emission trading. Faced with the requirement of carbon emission reduction, the design of trading rules and emission allowances is still obscure. Power companies are confused about participation in the trading system and future investment deployment. This paper used agent-based modelling method to simulate the carbon emission trading system implemented in China’s power sector and investigate the impact of the system on the future development of power sector, including the change of electricity supply, carbon emission reduction. Through analyzing transaction status of emission permits and heterogenous behaviors of company agents, the results show that emission trading system can promote a virtuous cycle between the behaviors of emission reduction and invest renewable energy of company agents. Meanwhile, large-size companies show a more diverse investment compared with the small and medium-size companies (SMEs). The investment of the SMEs focuses on PV, hydro and gas-fired power generation, which is related to their historical advancement of technology. The identification of the future pathway and the investigation of the heterogenous behaviors in power sector can both assist the government to design the fully implemented carbon emission trading system.

Keywords emission trading system, agent-based modelling, power sector, heterogeneous behaviors