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2. An uncertainty analysis for offshore wind power investment decisions in the context of the national subsidy retraction in China: A real options approach.
- Author
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Liu, Qian, Sun, Yan, Liu, Linyao, and Wu, Mengcheng
- Subjects
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WIND power , *OFFSHORE wind power plants , *CARBON offsetting , *CLEAN energy , *CARBON emissions , *SUBSIDIES - Abstract
As a new clean and sustainable energy that can reduce carbon emissions, offshore wind energy has received much more attention in recent years. In response to the complexity and flexibility issues in the decision-making process of offshore wind power investment, this paper proposes an investment decision framework based on a bidimensional binominal lattice that embeds deferral options, aiming to derive the appropriate development timing and investment potential for corporate investors in uncertain environment of market and technological development. And the investment model embedding revenue from carbon emission reduction highlights the advantages of clean energy. Furthermore, we creatively compare the policy effects of three subsidy schemes using the model as a policy analysis tool and use scenario analysis to simulate the impacts of dynamic adjustments in subsidies on investment decisions. For the case of an offshore wind power plant in Guangdong province, China, we find that the local government has to provide a subsidy of 0.11 CNY/kWh to allow the project to be profitable. In the absence of subsidies, however, it is preferable to defer the decision of investment with a wait-and-see attitude. Given the same total government financial input, we find that it will be more beneficial for the government to provide R&D subsidy than electricity tariff subsidy and operation subsidy in terms of long-term sustainable development. Our findings also demonstrate that considerations in the carbon trading market will also contribute to the development of offshore wind power. The conclusions of this article can provide valuable guidelines for corporate investors to adjust the appropriate development timing and for policymakers to optimize subsidy allocation, so as to promote the healthy development of offshore wind power and low-carbon transition. [ABSTRACT FROM AUTHOR]
- Published
- 2021
- Full Text
- View/download PDF
3. Could carbon emission control firms achieve an effective financing in the carbon market? A case study of China's emission trading scheme.
- Author
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Li, Yin, Liu, Tiansen, Song, Yazhi, Li, Zhongfei, and Guo, Xin
- Subjects
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CARBON pricing , *EMISSION control , *CARBON nanofibers , *CARBON emissions , *EMISSIONS trading , *CONSTRUCTION costs , *CHINA studies - Abstract
This paper proposes a new prediction method incorporating a set of measuring models applicable to the financing efficiency of China's carbon market to quantify such market's maturity, trading risk coefficient, and financing income. Our theoretical analysis indicates that the price of carbon emission quota essentially affects the financing efficiency of carbon market. While a robust safeguard measure to obtain a respectable income from carbon market financing is the long-term average quota price exceeding the initial quota price. Empirical findings derived from China's emissions trading scheme pilots reveal that these pilots can be divided into the growth-oriented market (i.e. Guangdong whose financing capacity is always significant), the balance-oriented market (i.e. Shanghai and Hubei whose quota pricing mechanisms and the financing level of carbon markets both maturely develop), and the risk-oriented market (i.e. Beijing whose quota price runs at a high-level with an intense financing income volatility). It is therefore achieved that carbon market's maturity level and quota price volatility are both robustly explicable for different financing effects among these pilots. Our key findings show that expanding the coverage of quota trading parties, stabilizing carbon price, and promoting carbon asset management help to improve the financing efficiency of carbon market. • The financing mechanism is analyzed with clarifying its main influence factors. • A stochastic process is used to build a price simulation equation that meets the operation law of China's carbon market. • An income model is built and thus evaluate market financing effect based on price expression and financing mechanism. • The financing effect of China's 8 pilot markets is measured, and thus 3 kinds of development modes are proposed. [ABSTRACT FROM AUTHOR]
- Published
- 2021
- Full Text
- View/download PDF
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