Economy-wide impacts of industry coverage in China’s carbon trading system under the context of power marketization reform

Based on a computable general equilibrium model with a carbon trading module, this study depicts the distortion factors in the power market, thereby exploring the socio-economic and energy-environmental effects of different industry expansions in the carbon market under the context of power market reform. The results show that: While maintaining the status quo of the power market, only covering the power sector has the larger negative impact on national GDP and households’ welfare, and the profit increase of the eight industries is the smaller; however, with the industry expansion of the carbon market, the impact on the macroeconomy can be mitigated to a certain extent. Regarding the abatement costs, only covering the power sector has the highest marginal abatement cost (MAC) and sectoral abatement costs; as the carbon market industry expands, both costs will decrease; but the total abatement cost shows the opposite trend. In terms of energy, when the carbon market is expanded to four or eight industries, it can promote the renewable energy share and electrification rate to a certain extent. Regarding the environment, the carbon abatement rates of the newly included sectors have increased significantly, and each scenario has a better synergistic emission reduction effect of pollutants. In the case of power market reform, The relationship between advantages and disadvantages of each carbon market industry expansion scheme in social-economy, abatement costs and energy environment is basically consistent with that before the reform; In this case, MAC and total abatement costs will be increased.