Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction
International Journal of Environmental Monitoring and Analysis
Volume 7, Issue 1, February 2019, Pages: 1-13
Received: Jan. 19, 2019; Accepted: Feb. 27, 2019; Published: Apr. 1, 2019
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Author
Shijun Fu, Department of Logistic Engineering, Chongqing University of Arts and Sciences, Chongqing, China
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Abstract
Market design is the core issue for reducing CO2 emissions from coal-fired power industry, however the current carbon market has some deficiencies in this area. Utilizing the combinatorial auction way, this article proposed an enhanced carbon market special for power industry by complementing current cap-and-trade system. Concretely, the enhanced market design is improved by lower- and upper-bound price, combinatorial auction for carbon allowances initial allocation, carbon submarket trade, and electricity-environment coordinated regulation. In the enhanced market, generator competes for initial carbon allowances as a form of delivering a demand function to market organizer, which can be depicted as and settled by a stochastic linear programming model. Given the carbon allowances market supply curve (i.e., total initial allowances issued), environment regulator matches the market demand curve (i.e., through adding up those individual bid demand curves together) in a uniform market clearing price (MCP) way; by this means, initial carbon market equilibrium is reached. Under this enhanced mechanism, price of bidders is ordered according to their operational advantage, moreover, respective quantity of bid allowances is also sequenced in the same way. Comparing with current cap-and-trade system, the enhanced market design can efficiently motivate generator to reduce CO2 emissions through controlling CO2 intensity per sold MWh. Numerical simulation further verified the efficiency of this enhanced carbon market design.
Keywords
CO2 Abatement, Carbon Market Design, Coal-fired Power Industry, Combinatorial Auction
To cite this article
Shijun Fu, Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction, International Journal of Environmental Monitoring and Analysis. Vol. 7, No. 1, 2019, pp. 1-13. doi: 10.11648/j.ijema.20190701.11
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Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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