The Guangdong Emissions Trading Scheme
A pilot carbon emissions trading scheme (ETS) has been launched for three years in the Guangdong (GD) Province in China, with the power industry contributing nearly 66% of the covered CO2 emissions. This article reviews the policy design of the power sector in the GD ETS, and finds that the percentage of paid allowance is the primary factor reflected in the carbon cost for generators with an average efficiency. The ways the GD ETS influences the costs and profits of power plants are our primary focus.
The impacts of carbon cost on the overall cost of 300 MW, 600 MW and 1,000 MW plants are analyzed. The results indicate that the ratio of carbon cost to total cost is about 0.5% for the power plants in the GD ETS. This small percentage has little influence on plant operations. The impacts of the carbon cost on the cash flow of the three sizes of plants are assessed by their internal rates of return. A critical curve is developed and shows the benefit scope for the plants at a specific paid allowance and carbon price. This can be used by governments to improve policy design and by the enterprises to manage their carbon assets.
International Energy Agency (2012). World energy outlook.
Arzbaecher, C. and Parmenter, K. (2014). Carbon policy impact on industrial facilities.
Strategic Planning for Energy and the Environment, 34(1), pages 11–39.
National Development and Reform Commission (2011, October 29). Notice on
the work of piloting carbon emissions trading. http://www.ndrc.gov.cn/zcfb/
Duan, M., Pang, T. and Zhang, X. (2014). Review of carbon emissions trading pilots in
China. Energy and Environment, 25(3-4), pages 527-550.
Qi, S., Wang, B. and Zhang, J. (2014). Policy design of the Hubei ETS pilot in China.
Energy Policy, 75, pages 31–38.
Wu, L., Qian, H. and Li (2014). Advancing the experiment to reality: perspectives on
Shanghai pilot carbon emissions trading scheme. Energy Policy, 75, pages 22–30.
Jiang, J., Ye, B. and Ma, X. (2014). The construction of Shenzhen’s carbon emissions
trading scheme. Energy Policy, 75, pages 17–21.
Hart, C. and Zhong, M. (2014). China’s regional carbon trading experiments and the
development of a national market: lessons from China’s SO2 trading program. Energy
and Environment, 25(3-4), pages 577–592.
Wang, P., Dai, H., Ren, S., Zhao, D. and Masui, T. (2015) Achieving Copenhagen target
through carbon emissions trading: economic impacts assessment in Guangdong Province
of China. Energy, 79, pages 212–227.
People’s Government of Guangdong Province (2012, August 20). Inform on issuing
the scheme of greenhouse gas emissions control for Guangdong Province during the
th Five-Year Plan. http://zwgk.gd.gov.cn/006939748/201208/t20120828_341198.
Guangdong Provincial Development and Reform Commission (2013, November 25).
Notice of the first allowance allocation plan in Guangdong ETS. http://www.gddpc.
Cong, R. and Y. Wei (2010). Potential impact of carbon emissions trading (CET) on
China’s power sector: a perspective from different allowance allocation options. Energy,
, pages 3,921–3,931.
Zhao, X., Yin, H. and Zhao, Y. (2015). Impact of environmental regulations on the
efficiency and CO2 emissions of power plants in China. Applied Energy, 149, pages
Teng, F., Wang, X. and Zhiqiang, L. (2014). Introducing the emissions trading system
to China’s electricity sector: challenges and opportunities. Energy Policy, 75, pages
Guangdong Provincial Development and Reform Commission (2014, August
. Notice of the allowance allocation plan in Guangdong ETS in 2014.
Guangdong Provincial Development and Reform Commission (2015, July 10). Notice
of the allowance allocation plan in Guangdong ETS in 2015.http://220.127.116.11:9000/
Liu, L., Zong, H., Zhao, E., Chen, C. and Wang, J. (2014). Can China realize its carbon
emissions reduction goal in 2020 from the perspective of thermal power development.
Applied Energy, 124, pages 199–212.
Electric Power Planning and Engineering Institute (2014). Reference cost index on the
limitation design of thermal power engineering. China electric power press.
Guangdong Province Development and Reform Commission (2014, September
. Notice of lowering feed-in tariff of the power generation enterprises.
National Development and Reform Commission (2011, March). Provincial greenhouse
gas inventory compilation guidelines (try out).
Regional Greenhouse Gas Initiative. Market monitor reports. http://www.rggi.org/
market/market_monitor, accessed 5 July 2017