AUTHOR=Solaymani Saeed 

TITLE=A prediction on the impacts of China’s national emissions trading scheme on CO2 emissions from electricity generation

JOURNAL=Frontiers in Energy Research

VOLUME=Volume 10 - 2022

YEAR=2022

URL=https://www.frontiersin.org/journals/energy-research/articles/10.3389/fenrg.2022.956280

DOI=10.3389/fenrg.2022.956280

ISSN=2296-598X

ABSTRACT=One of the government policies that can reduce CO2 emissions is the Emissions Trading Scheme (ETS), which was implemented in the Chinese economy on July 16, 2021. It is the largest ETS in the world, covering 12% of global carbon dioxide (CO2) emissions. Since this policy has not been experienced in China it is necessary to predict its impact on the level of CO2 emissions in that country. Furthermore, electricity and heat production is the major contributor to total CO2 emissions from fuel combustion. Therefore, this study attempts to predict the impact of the emissions trading scheme on electricity generation using annual data from 1985 to 2019 on electricity generation from coal, oil and natural gas. For this purpose, this study first predicts CO2 emissions from the combustion of coal, oil and natural gas for electricity generation using ARIMA and structural Vector Autoregression (SVAR) techniques over the 2020-2030 period. It then estimates the short- and long-run impact of the ETS policy on CO2 emissions from coal, oil and natural gas power plants over the projected period (2020-2030) by employing the ARDL methodology. The results also suggest that the ETS policy is effective in reducing the CO2 emissions from electricity production from the combustion of all fuels in the long-run. These results suggest that improving the efficiency of all fuels can significantly reduce CO2 emissions in electricity generation from coal, oil and natural gas in the short- and long-run. This is because of the increase in the level of CO2 emissions from these power plants in the long run which exceed the threshold value. But it has a negative and statistically significant impact on CO2 emissions from the natural gas power plants. The results of the study enable China’s energy policymakers to update the ETS policy in its next phases.