Research On Coordination Between Carbon Emission Reduction Policy And Renewable Energy Policy In Chinese Electricity Sector

The potential effects of interaction between the coexisting policy instruments are of notable concern for the policymakers.Therefore,it is of great theoretical and practical significance to study the coordination between carbon emission reduction policy and the renewable energy promotion policy.This paper analyzed the coordination between carbon emission reduction policy and the renewable energy promotion policy in China.Finally we have offered several proposals to the design of the national-wide carbon emission market and renewable energy policy in China.The main findings and conclusions are as follows:(1)We constructed a dataset of 2059 and 439 onshore wind and PV power projects in China’s thirty provinces over the period of 2006–2015,based on which the levelized costs of electricity(LCOE)are estimated.The results suggest that the carbon pricing policy can compensate part of revenue loss caused by the declining FITs and improve the profitability of the projects.However,the current carbon prices in China’s carbon emission trading pilots are not high enough to compensate all the revenue loss especially under the grid parity scenario,and cannot support the sustainable development of the onshore wind and solar PV power in China without FIT policy.A sensitivity analysis of the effect of the carbon pricing policy show that in the case of higher investment risk and higher curtailment rate,the effect of carbon pricing policy on promoting the wind and solar PV power investment seems to be more significant.(2)We used the theory of the learning curve to investigate financing options to support grid parity for wind electricity.First,relying on a panel dataset consisting of information from 2059 onshore wind power projects and 439 solar PV power projects in China’s thirty provinces over the period of 2006–2015,we empirically estimated the learning rate of onshore wind and solar PV technology to be around 7.37% and 17.38%.Driven by this learning rate,Chinese onshore wind and solar PV power LCOE decreased from 0.41 and 0.85 CNY/ k Wh in2016 to 0.36 and 0.55 CNY / k Wh in 2025,respectively.However,the cost evolution of onshore wind power and solar PV power is still not enough to achieve grid parity in2020.Carbon pricing policy is effective to compensate the decreasing of Feed-in Tariff and promote the achievement of grid parity in 2020.(3)We constructed partial equilibrium models with single region and inter-region to explore the interaction between carbon pricing and renewable electricity subsidies.The results show that there is conflict effect between the carbon pricing and renewable energy electricity subsidy policy in single region and inter-region conditions.Based on empirical study of China’s case,the means by which to coordinate different policy targets to reduce the negative effects of any potential conflicts is discussed.