What the study found
China’s electricity and carbon markets are not fully coupled, but carbon prices do transmit to generator-side electricity tariffs with measurable efficiency. The study also reports that carbon costs can drive corporate energy transition in the case examined.
Why the authors say this matters
The authors say the findings matter because China’s carbon market is described as important for steering the power sector toward a clean transition through price signals. They conclude that a unified environmental attributes registry and reforms to the compliance cycle are urgently needed so carbon costs are reflected more transparently and efficiently in prices.
What the researchers tested
The researchers used provincial data from 2013 to 2023 to study the coupling mechanism between electricity and carbon markets, price transmission, and the incentive effect of carbon pricing. They quantified transmission efficiency, used rolling regression to examine changes over time, built an ecosystem panorama of the coupled market, and analyzed the case of Huaneng International Group.
What worked and what didn't
The empirical analysis estimated carbon price transmission efficiency 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%, while the study also identifies barriers including undeducted CCERs, distorted grid emission factors, unaccounted carbon liabilities for exporters, and generators not fully passing through carbon costs.
What to keep in mind
The abstract does not provide detailed limitations beyond noting the market coupling remains incomplete. The case study findings are specific to the company examined, and the broader results are based on the provincial data and methods described in the abstract.
Key points
- The study finds that China’s electricity and carbon markets remain incompletely coupled.
- Carbon price transmission to generator-side electricity tariffs was estimated at 0.765.
- The pass-through effect changed over time and was temporarily weakened during major institutional transitions.
- In the Huaneng International Group case, carbon intensity fell by 37% and clean energy share reached 31.24%.
- The authors identify barriers including undeducted CCERs, distorted grid emission factors, and incomplete pass-through of carbon costs.
Disclosure
- Research title:
- China’s electricity and carbon prices show partial coupling
- Authors:
- Jiajun Wu, Yanjun Shen, R. Yang, Hang Fan, Yunjie Duan
- Institutions:
- North China Electric Power University
- Publication date:
- 2026-01-30
- OpenAlex record:
- View
Get the weekly research newsletter
Stay current with peer-reviewed research without reading academic papers — one filtered digest, every Friday.