『Abstract
To realize environmentally sustainable development of the economy,
China has decided to cut carbon dioxide emissions per unit of
GDP by 40 to 45 percent by 2020, compared with the level in 2005.
Based on China's emission abatement target, this paper first analyzes
enterprises' emission reduction pathways in practical production
processes, and then develops a framework to derive the magnitude
of investment required in each pathway in order to achieve the
designated target at the minimal cost. Under the framework, it
is found that in the absence of policy guidance, individual enterprises'
emission reduction investments deviate from the optimal level.
To correct the distortion, an alternative option is provided.
Meanwhile, to ensure achievement of the emission reduction target,
a stochastic model is introduced to measure the uncertainty arising
from emission abatement investment. The results show that an appropriate
emission abatement ratio can reduce ‘the systemic risk’ of emission
abatement. Finally, a simulation is given to demonstrate the results
derived from the stochastic model.
Keywords: Emission abatement; Investment; Uncertainty』
1. Introduction
2. The model
2.1. Carbon emission abatement pathways
2.2. Assumptions and notations
3. Optimal emission abatement investment and its implementation
4. Uncertainty of emission abatement
5. Case study
6. Conclusion
Acknowledgments
Appendix A
A.1. The proof of Proposition 1
A.2. The derivation of the system of Eq. (2)
References