Volume 9: Sustainable Energy Solutions for Changing the World: Part I

Impact of Household Participation in Carbon Market: a CGE-based Case Study of China Kangxin An, Shihui Zhang, Hai Huang, Yuan Liu, Wenjia Cai, Can Wang

Abstract

Policy on household carbon reduction behavior has an important role on climate actions but is neglected in practice. Household participation in carbon market is a valuable solution. Enhancing understanding of impacts facilitates the deployment on ground in those countries with carbon market. A dynamic computable general equilibrium model is used to analysis the socioeconomic impacts of household participation in carbon market. With the case study of China, we find household participation can reduce 45.5% and 28.1% of fossil fuel emissions of rural and urban households, save carbon mitigation cost by 13.60~14.01%, reduce household welfare loss and influence social equity in 2050. The allocation mechanisms would impact the household welfare and social equity. The methodology can be applied in subregions and other countries to explore the magnitude of impacts. This study evidences the benefits of household participation in carbon market, and give policy-makers some insights to design a reasonable household carbon reduction policy around the world.

Keywords computable general equilibrium (CGE) model, emission trading scheme (ETS), household participation, allocation mechanism