Gradual introduction of carbon allowance auctions facilitates sustainable emission reductions in the power sector

Achieving deep decarbonization of the power sector is essential for China's carbon neutrality goal and global climate mitigation. However, the coordination among emission reduction effectiveness, carbon market stability, and energy security remains unclear. This study develops a bottom-up multi-agent simulation model, Electricity and Carbon Coupling Multi-Agent System (ECMAS), integrating the power market with primary and secondary carbon markets to capture the adaptive behaviors of 2,241 heterogeneous power enterprises under alternative carbon market designs. Four policy scenarios are simulated to evaluate different pathways of quota tightening and auction introduction. Results show that rapidly synchronizing quota reductions with high auction shares imposes excessive carbon pressure, leading to carbon price collapse, premature fossil capacity retirement, and supply risks. In contrast, gradually introducing auctions alongside smooth quota tightening stabilizes carbon prices, supports phased low-carbon investment, and achieves sustained emission reductions. These findings provide evidence-based guidance for improving China's carbon market and offer transferable insights for global carbon market design under deep decarbonization.