Market Design for CO<sub>2</sub> Abatement in Coal-fired Power Industry Based on Combinatorial Auction

Shijun Fu

doi:doi:10.11648/j.ijema.20190701.11

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Market Design for CO₂ Abatement in Coal-fired Power Industry Based on Combinatorial Auction

Shijun Fu

Published in International Journal of Environmental Monitoring and Analysis (Volume 7, Issue 1)

Received: 19 January 2019 Accepted: 27 February 2019 Published: 1 April 2019

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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.

Published in	International Journal of Environmental Monitoring and Analysis (Volume 7, Issue 1)
DOI	10.11648/j.ijema.20190701.11
Page(s)	1-13
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

CO₂ Abatement, Carbon Market Design, Coal-fired Power Industry, Combinatorial Auction

References

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APA Style

Shijun Fu. (2019). Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction. International Journal of Environmental Monitoring and Analysis, 7(1), 1-13. https://doi.org/10.11648/j.ijema.20190701.11

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ACS Style

Shijun Fu. Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction. Int. J. Environ. Monit. Anal. 2019, 7(1), 1-13. doi: 10.11648/j.ijema.20190701.11

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AMA Style

Shijun Fu. Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction. Int J Environ Monit Anal. 2019;7(1):1-13. doi: 10.11648/j.ijema.20190701.11

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@article{10.11648/j.ijema.20190701.11,
  author = {Shijun Fu},
  title = {Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction},
  journal = {International Journal of Environmental Monitoring and Analysis},
  volume = {7},
  number = {1},
  pages = {1-13},
  doi = {10.11648/j.ijema.20190701.11},
  url = {https://doi.org/10.11648/j.ijema.20190701.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijema.20190701.11},
  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.},
 year = {2019}
}

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TY  - JOUR
T1  - Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction
AU  - Shijun Fu
Y1  - 2019/04/01
PY  - 2019
N1  - https://doi.org/10.11648/j.ijema.20190701.11
DO  - 10.11648/j.ijema.20190701.11
T2  - International Journal of Environmental Monitoring and Analysis
JF  - International Journal of Environmental Monitoring and Analysis
JO  - International Journal of Environmental Monitoring and Analysis
SP  - 1
EP  - 13
PB  - Science Publishing Group
SN  - 2328-7667
UR  - https://doi.org/10.11648/j.ijema.20190701.11
AB  - 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.
VL  - 7
IS  - 1
ER  -

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Author Information

Shijun Fu

Department of Logistic Engineering, Chongqing University of Arts and Sciences, Chongqing, China

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Plain Text BibTeX RIS

APA Style

Shijun Fu. (2019). Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction. International Journal of Environmental Monitoring and Analysis, 7(1), 1-13. https://doi.org/10.11648/j.ijema.20190701.11

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ACS Style

Shijun Fu. Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction. Int. J. Environ. Monit. Anal. 2019, 7(1), 1-13. doi: 10.11648/j.ijema.20190701.11

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AMA Style

Shijun Fu. Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction. Int J Environ Monit Anal. 2019;7(1):1-13. doi: 10.11648/j.ijema.20190701.11

Copy | Download

@article{10.11648/j.ijema.20190701.11,
  author = {Shijun Fu},
  title = {Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction},
  journal = {International Journal of Environmental Monitoring and Analysis},
  volume = {7},
  number = {1},
  pages = {1-13},
  doi = {10.11648/j.ijema.20190701.11},
  url = {https://doi.org/10.11648/j.ijema.20190701.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijema.20190701.11},
  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.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Market Design for CO2 Abatement in Coal-fired Power Industry Based on Combinatorial Auction
AU  - Shijun Fu
Y1  - 2019/04/01
PY  - 2019
N1  - https://doi.org/10.11648/j.ijema.20190701.11
DO  - 10.11648/j.ijema.20190701.11
T2  - International Journal of Environmental Monitoring and Analysis
JF  - International Journal of Environmental Monitoring and Analysis
JO  - International Journal of Environmental Monitoring and Analysis
SP  - 1
EP  - 13
PB  - Science Publishing Group
SN  - 2328-7667
UR  - https://doi.org/10.11648/j.ijema.20190701.11
AB  - 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.
VL  - 7
IS  - 1
ER  -

Copy | Download