Integration of tradable green certificates trading and carbon emissions trading: How will Chinese power industry do?

Abstract To promote energy conservation and emission reduction, China recently implemented a tradable green certificate market on the basis of the carbon emissions trading market. As an energy-intensive industry, the power industry is one of the leading contributors to carbon emissions in China. It is also the main participant in both the tradable green certificate market and the carbon emissions trading market. How to deal with the integration impact of the green certificate market and the carbon emissions trading market becomes a great challenge for the Chinese power industry. To improve sustainable development of Chinese power industry considering the integration impact of the green certificate market and the carbon emissions trading market, we established a simulation model based on system dynamics theory and scenario design method. The results of the study show that: (1) the implementation of tradable green certificate and carbon emissions trading mechanisms helps to control carbon emissions of the power industry, and to promote national targets of carbon emission reduction in China, (2) the optimization of electric power structure is positively related with renewable portfolio standard, and (3) the increase in the investment of renewable energy power generation technology not only brings large profit margins to power companies but also promote the achievement of sustainable development goals at the national level.