What the study found
The study found that China’s electricity and carbon markets are not fully coupled, but carbon prices do transmit to generator-side electricity tariffs. It also found evidence that carbon pricing can influence corporate energy transition, while several systemic barriers still limit how completely costs are reflected in prices.
Why the authors say this matters
The authors say this matters because, under China’s "dual-carbon" goal, the carbon market is meant to help guide the power sector toward a cleaner transition through price signals. The study suggests that improving market design and the link between policy and pricing is needed so carbon costs are reflected more transparently and efficiently.
What the researchers tested
The researchers used provincial data from 2013 to 2023 to examine the coupling mechanism between electricity and carbon markets, the transmission of carbon prices, and the incentive effect of carbon pricing. They estimated transmission efficiency, used rolling regression to track changes over time, built a market ecosystem overview, and examined the case of Huaneng International Group.
What worked and what didn't
They quantified the transmission efficiency of carbon prices to generator-side electricity tariffs at 0.765. Rolling regression showed a dynamic pass-through effect that was temporarily weakened during major institutional transitions. In the case study, carbon costs were associated with a 37% reduction in carbon intensity and a clean energy share of 31.24%, but undeducted CCERs and the carbon price’s "tidal effect" were identified as barriers to full pass-through.
What to keep in mind
The abstract describes one case study and provincial-level analysis in China, so the findings are specific to that context. It also notes limitations in the current market design, including undeducted CCERs, distorted grid emission factors, and incomplete cost pass-through, but it does not describe additional study limitations.
Key points
- Provincial data from 2013 to 2023 showed partial coupling between China’s electricity and carbon markets.
- The estimated transmission efficiency of carbon prices to generator-side electricity tariffs was 0.765.
- Pass-through effects weakened temporarily during major institutional transitions.
- A case study of Huaneng International Group linked carbon costs with a 37% drop in carbon intensity and a clean energy share of 31.24%.
- Undeducted CCERs and the carbon price’s "tidal effect" were identified as barriers to full price transmission.
Disclosure
- Research title:
- China study finds partial electricity-carbon price coupling
- Authors:
- Jiajun Wu, Yanjun Shen, R. Yang, Hang Fan, Yunjie Duan
- Institutions:
- North China Electric Power University, North China Electric Power University, North China Electric Power University, North China Electric Power University, North China Electric Power University
- Publication date:
- 2026-01-30
- OpenAlex record:
- View
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