Cooperative energy-saving and carbon-reducing
game models in China: from the perspective of
electricity generation and utilization
Lijun Zeng PH.D.
Shanghai Jiaotong University
Shandong University of Science and Technology
Outline
1
Introduction
2
Materials and Methods
3
Results and Discussion
4
Conclusions
6
1 Introduction
“China pledges to peak CO2
emissions by around 2030 and
strive to achieve it as soon as
possible, and by 2030, reduce CO2
per unit of GDP by 60-65% over the
2005 level”.
1 Introduction
The special energy structure of China
2.85%
4.50%
2.38%
0.42%
hydropower
Coal
22.60%
41.60%
5.90%
25.40%
18.92%
Oil
Natural gas
Electricity
Heat
Energy end-use structure in China(2012)
0.01%
75.43%
thermal
Power
nuclear
power
wind power
Electricity structure in China(2014)
1 Introduction
The current mode of energy saving and carbon reducing
Priovince
1
goal
goal
goal
…
Central
government
General
goal
Priovince
2
Priovince
i
…
goal
Priovince
n
Unsatisfactory measures
e.g. mandatory power
rationing
Cannot motivate each province entirely
Undesirable consequences
e.g. wind and solar
curtailment
Reduction goal of energy consumption per unit of GDP
( the Twelfth Five-year)
the whole country
16%
Tianjin, Shanghai, Jiangsu, Zhejiang and Guangdong
18%
Beijing, Heibei, Liaoning, and Shandong
17%
Shanxi, Jilin, and Heilongjiang
16%
Shanxi, Guangxi, Guizhou, and Gansu
15%
Hainan, Xizang, Qinghai, and Xinjiang
10%
1 Introduction
• Cooperative electricity-saving model (CESM)
• Cooperative carbon-reducing model (CCRM)
Priovince
1
goal
Priovince
2
…
Central
government
General
goal
Reallocate quota
Motivate each province entirely
Priovince
i
…
Priovince
n
Reallocate benefit
2 Materials and Methods
Cooperative electricity-saving
model (CESM):
• an optimal model of
electricity-utilization benefit
• a model to allocate the
benefit of cooperation
Cooperative carbon-reducing
model (CCRM):
• an optimal model of carbon
reduction
• a model to allocate the benefit
of cooperation
• Table 2-1 summarizes the variables and parameters and their
definitions that will be used in CESM and CCRM.
2.1.1 The optimal model of electricityutilization benefits
• The electricity-utilization benefits of a province in a
cooperation union is composed of two parts: the actual
benefits from utilization of electricity and the transferred
benefits between provinces in the union
•
Gi (Eui) =πi(Eui) - shi i=1,2,…n
（2-1）
•
πi(Eui) =ωi(Eui) - Γi(Eui) i=1,2,…n
（2-2）
• Shi is the benefits from utilizing the electricity transferred
within a union and satisfy: in1 shi  0
• The function of total electricity-utilization benefits for the
whole union is
n
n
•
（2 -3）
G  i1 Gi  i 1[i ( Eui )  Γi ( Eui )]
2.1.1 The optimal model of electricityutilization benefits
• to build the function of the total electricity-utilization
benefits in the union, we need to build the function of the
annual gross benefits from utilization of electricity ωi(Eui) and
the function of the annual cost of electricity consumption
Γi(Eui) in province i.
• Cobb-Douglas production function is used to deduce the
contribution level of electricity utilization to GDP in each
province:
•
(2-4)
• fit the function between the annual gross benefits and the
annual electricity consumption in province i to build ωi(Eui)
2.1.1 The optimal model of electricity-utilization
benefits
• The sum of annual electricity consumption of all the
provinces should be less than or equal to the target set by
the central government. We obtain the constraints:
n
n
•
(2-8)
E

i1 ui i1 qui
• Any province should conduct electricity saving by ensuring
the basic socioeconomic activities run normally.
•
(2-9)
• the amount of electricity consumption in any province
should not exceed the capacity of the power facility system:
•
(2-10)
2.1.1 The optimal model of electricityutilization benefits
• the optimal electricity-utilization benefits model for
cooperative electricity-saving union, aimed to maximize the
electricity-utilization benefits by optimizing the amount of
electricity consumption of each province in the union.
•
s.t.
2.1.2 Cooperative electricity-saving benefit
allocation model
• In the optimal model, the cooperative electricity-saving
union meets the national electricity-saving target through
cooperative efforts and creates optimal total benefit from
electricity utilization. The allocation of this benefit greatly
affects implementation of CESM.
2.1.2 Cooperative electricity-saving benefit
allocation model
2.2 Cooperative carbon-reducing model
(CCRM)
• 2.2.1 The optimal model of carbon reduction
• This paper defines the amount of CO2 emitted by
producing a unit of electricity power with an electricitygeneration method as the carbon intensity of this
electricity-generation method, and the average amount
of CO2 emitted by producing a unit of electricity power in
a province as the integrated carbon intensity of
electricity generation in this province. Therefore, the
annual CO2 emission by electricity generation in a
province is not determined by the annual electricity
generation but also determined by the integrated carbon
intensity of electricity generation in this province.
2.2.1 The optimal model of carbon reduction
• So we build the function of annual CO2 emission by
electricity generation in a province as follows:
•
(2-16)
• Here is the annual electricity generation in province i,
and bi is the integrated carbon intensity of electricity
generation in province i. is determined by the capacity
structure of electricity production in province i and the
carbon intensity of each electricity-generation method,
which can be described as:
•
(2-17)
2.2.1 The optimal model of carbon reduction
• aik is the capacity proportion of electricity generation
method k in province i and satisfies the following two
constraints:
•
(2-18)
•
(2-19)
• Consequently, the function of the quantity of CO2 emitted
by electricity generation in the whole union can be built as
follow:
•
(2-20)
Some constraints to the optimal model of
carbon reduction
• Each province has its own electricity generation capacity
range. When all electricity generation facilities in the province
work at their full capacity, the maximum quantity of electricity
generation for this province can be achieved. This annual
electricity generation upper limit is represented as Mi. On the
other hand, the electricity generation facilities will always
produce at least some electricity power to satisfy the requisite
social and economic activities in this province. This electricity
generation lower limit is represented as
. the annual
electricity generation range for a province is:
•
(2-21)
Some constraints to the optimal model of
carbon reduction
• The sum of annual CO2 emission by electricity generation of all
the provinces in the union should be less than or equal to the
target set by the central government. Therefore, we obtain the
constraints:
•
(2-22)
• To meet the demands of socioeconomic development, the
total annual electricity generation in the union should not be
less than the sum of the annual quota of the electricity
generation of all the provinces in the union:
•
(2-23)
2.2.1 The optimal model of carbon reduction
• the optimal cooperative carbon-reducing model for the
whole union, aimed to minimize the carbon emission by
optimizing the amount of electricity generation of each
province in the union.
•
s.t.
2.2.2 Cooperative carbon-reducing benefit
allocation model
• In the optimal model, the cooperative carbonreducing union meets the national carbon-reducing
target through cooperative efforts and minimizes the
carbon emission by electricity generation, which will
create carbon-reducing benefit by selling the
available emission right. The allocation of this benefit
greatly affects implementation of CCRM.
2.2.2 Cooperative carbon-reducing benefit
allocation model
2.2.2 Cooperative carbon-reducing benefit
allocation model
• here |S| is the number of elements (cooperating provinces) in
subset S, H|S| is the weighed factor, and
is the
cooperation benefit that does not include province i.
3 Result and Discussion
• Based on the economic development and natural resources
endowments, this paper selects Shanghai, Sichuan, Shanxi,
and Gansu as case study samples for cooperative energysaving and carbon-reducing models.
• Shanghai is located in East China. While Shanghai is one of
the most advanced provincial regions in economic
development, it is scarce in natural resources.
• Sichuan is located in Southwest, is rich in natural resources
especially in water power resource, and is a major economic
province with abundant natural resources.
3 Result and Discussion
• Shanxi is located in North China. As one of the most
important coal bases in China, Shanxi provides a large
proportion of thermal power to the whole country. Shanxi is
an economic less developed province with abundant energy
resources.
• Gansu is located in Northwest. Besides coal, fossil oil, and
natural gas, Gansu is rich in renewable energy such as solar
energy and wind energy. In general, Gansu is an economic
backward province with abundant energy resources.
3.1 Case Study of cooperative electricitysaving model
• 3.1.1 SH-SC-SX-GS optimal model of electricityutilization benefit
• 3.1.2 SH-SC-SX-GS cooperative electricity-saving
benefit allocation model
3.1.1 SH-SC-SX-GS optimal model of electricityutilization benefit
• (1) Construction of function of the cost of electricity
consumption for sample provinces
• (2) Construction of function of the annual gross
benefits from utilization of electricity for sample
provinces
• (3) Construction and solution of SH-SC-SX-GS
optimal model of electricity-utilization benefit
(1) Construction of function of the cost of electricity
consumption for sample provinces
• Firstly, we obtained the electricity price and quantities of
electricity consumption of each kind of consumption
terminal in each sample province through China Energy
Statistical Yearbook, and calculated the annual total
revenue of power enterprises in each sample province.
• Secondly, we obtained the cost to revenue ratio of power
enterprises in each sample province, and calculated the
annual net cost of electricity consumption from 2001 to
2014 for each sample province.
(1) Construction of function of the cost of electricity
consumption for sample provinces
• Finally, we use the data of annual net cost of electricity
consumption and annual quantity of electricity consumption
from year of 2001 to 2014, and take Eui as independent
variable and Гi as dependent variable, and fitted the function
of cost of electricity consumption for sample provinces:
(2) Construction of function of the annual gross benefits
from utilization of electricity for sample provinces
• Firstly, we obtained the data of GDP, labor, fixed capital stocks,
and annual electricity consumption in SH, SC, SX, and GS from
2001 to 2014, and applied multiple linear regression analysis to
get the electricity output elastic coefficient for these provinces:
for SH it is 0.381, SC 0.199, SX 0.330, and GS 0.207.
• Secondly, according to data of the electricity output elastic
coefficient and GDP in these provinces from 2001 to 2014, we
calculated the annual gross benefits from utilization of
electricity, then found that the exponential function fit best. So
we got the function of the annual gross benefits from utilization
of electricity for the sample province:
(2) Construction of function of the annual gross benefits
from utilization of electricity for sample provinces
(3) Construction and solution of SH-SC-SX-GS optimal
model of electricity-utilization benefit
• This paper used the relevant data of 2014 to calculate the
optimal solution. According to energy-saving target set by
the central government and the data of GDP and electricity
consumption, we calculated the annual quotas of the
maximum electricity consumption for SH, SC, SX, and GS.
• According to China’s situation, λli and λui are estimated as
0.85 and 1.2, respectively. So the lower limit and upper
limit of the electricity consumption were gotten.
(3) Construction and solution of SH-SC-SX-GS
optimal model of electricity-utilization benefit
• Based on the above analysis, we establish the optimal
model of electricity-utilization benefits for SH-SC-SX-GS
union as follows:
(3) Construction and solution of SH-SC-SX-GS
optimal model of electricity-utilization benefit
• Table 3-3 the amount of electricity consumption and the
electricity-utilization benefit under two models
NCESM
CESM
electricityElectricity
utilization
consumption
benefit
（108kwh）
（108CNY）
1778.39
18260.87
Electricity
consumption
（108kwh）
electricityutilization benefit
（108CNY）
SH
1482.00
9718.89
SC
1882.92
2076.52
1995.71
2398.00
SX
1705.94
1058.48
1450.05
738.06
GS
1021.93
-250.76
868.64
-210.02
Total
6092.79
12603.13
6092.79
21186.91
68%↑
3.1.2 SH-SC-SX-GS cooperative electricity-saving
benefit allocation model
• Because the cooperative electricity-saving union consists of
four provinces, there are 12 possible combinations for the
cooperation. To obtain Shanghai's reward from cooperation,
we firstly calculated the values of v(s) for all the combinations
that involved Shanghai (Table 3-4), and then calculated the
corresponding cooperation benefits if Shanghai does not
participate, v(s\{SH}). In the final step, based on the benefit
allocation strategy in Eqs. (2-14) and (2-15), we obtained
Shanghai's reward from the cooperation benefits:
3.1.2 Shanghai-Sichuan-Shanxi-Gansu cooperative
electricity-saving benefit allocation model
Table 3-4 Calculation of the benefit allocation under CESM for Shanghai in 2014
3.1.2 Shanghai-Sichuan-Shanxi-Gansu cooperative
electricity-saving benefit allocation model
• Table 3-6 summarizes the money transferred among the four
provinces in 2014 based on their cooperation. Shanghai would
need to pay CNY3181.2 × 108 to SC, SX, and GS altogether. SC,
SX, and GS would get CNY906.43 × 108, CNY1540.15 × 108, and
CNY734.63 × 108 from SH respectively. They are the financial
compensations deserved by these provinces to compensate
for transferring shares of the electricity to SH. Without these
transferred electricity, SH couldn’t create so much benefit
from utilization of electricity.
3.1.2 Shanghai-Sichuan-Shanxi-Gansu cooperative
electricity-saving benefit allocation model
• Table 3-6 Allocation of benefits from cooperative Electricity saving
SH
B1: Benefits from utilization
electricity under NCESM
SC
SX
GS
Total
of
9718.89
2076.52 1058.48 -250.76 12603.13
B2: Cooperation benefit allocation based
15079.67 3304.43 2278.21
on the Shapley value method
524.61 21186.91
B3: Actural benefit from utilization of
electricity under the CESM (before 18260.87 2398.00 738.06 -210.02 21186.91
benefit allocation)
B4: Monetary payment to other
3181.2
-906.43
-734.63
0
provinces: B4=B3- B2
1540.15
B5: Added benefit from electricity under 5360.78
CESM: B5=B2-B1
1227.91 1219.73 775.37
8583.79
3.2 Case Study of cooperative carbonreducing model
• 3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• 3.2.2 SH-SC-SX-GS cooperative carbon-reducing
benefit allocation model
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• To determine the capacity structure of electricity production in
SH, SC, SX, and GS in 2014, we first obtained the data of
installed capacity of all kinds of electricity-generation method
in these provinces from China electricity power statistical
yearbook 2015, then we calculated the available time for each
kinds of electricity-generation method in each province, finally
we get the capacity proportion of each method and the
capacity structure.
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• According to data from National Energy Administration, we
obtained the standard coal consumption rate or power supply
in 2014 in China so that we calculated the carbon intensity of
thermal power generation method as 792.88gCO2/kwh. We
denote that the carbon intensity of hydroelectric generation,
solar power generation, and wind power generation as 0.
• With these data, we constructed the function of annual CO2
emission by electricity generation in SH, SC, SX, and GS:
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• Table 3-7 function of annual CO2 emission by electricity generation
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• According to carbon-reducing target set by the central
government and the data of GDP and electricity generation, we
calculated the annual quotas of the maximum CO2 emission by
generation and quantity of electricity generation for SH, SC, SX,
and GS.
• According to China’s situation, is estimated as 0.3. So the lower
limit and upper limit of the electricity generation were gotten.
SH
SC
SX
GS
Upper limit of electricity generation
1283.56
3505.71
3447.86
1698.82
lower limit of electricity generation
385.07
1051.71
1034.36
509.64
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• we established the optimal carbon-reducing model for SH-SC-SXGS cooperative carbon-reducing union as follows:
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• We applied Lingo 16.0 to solve the model, got the optimal
amount of electricity generation and carbon emission by
generation for each province in the union in 2014. On this
basis, this paper applied CNY70.2/tCO2, the average price of
carbon emission permit in Shenzhen Carbon Exchange in 2014,
and calculated the cooperative carbon-reducing benefit. The
amount of electricity generation and the carbon-reducing
benefit in these provinces under NCCRM and CCRM are as
follows:
3.2.1 SH-SC-SX-GS optimal model of carbon
reduction
• Table 3-9两种降碳模式下各省份产电量与碳排放数据
NCCRM
amount of
electricity
generation
（108kwh）
CCRM
carbon
amount of
emission by electricity
generation
generation
（108kg） （108kwh）
carbon
emission by
generation
（108kg）
carbonreducing
benefit
（108CNY）
SH
1069.04
840.93
385.07
302.90
37.77
SC
2257.86
470.47
3505.710
730.48
-18.25
SX
2631.30
2005.37
1531.160
1166.93
58.86
GS
1162.56
597.86
1698.820
837.64
-16.83
Total
7120.76
3914.62
7120.76
3073.95
59.02
3.2.2 SH-SC-SX-GS cooperative carbon-reducing
benefit allocation model
• Because the cooperative carbon-reducing union consists of
four provinces, there are 12 possible combinations for the
cooperation. To obtain Shanghai's reward from the carbonreducing cooperation, we firstly calculated the values of for
all the combinations that involved Shanghai (Table 3-10),
and then calculated the corresponding cooperation
benefits if Shanghai does not participate . In the final step,
based on the benefit allocation strategy in Eqs. (30) and
(31), we obtained Shanghai's reward from the cooperation
benefits:
3.2.2 SH-SC-SX-GS cooperative carbon-reducing
benefit allocation model
• Table 3-10 Calculation of the benefit allocation under CCRM
for Shanghai in 2014
3.2.2 SH-SC-SX-GS cooperative carbon-reducing
benefit allocation model
• Table 3-11 summarizes the money transferred among the
four provinces in 2014 based on their carbon-reducing
cooperation. Shanghai would need to pay CNY31.04 × 108
and SX need pay CNY43.93 × 108 to SC and GS respectively.
SC and GS would get CNY48.18 × 108 and CNY24.26 × 108
from SH and SX respectively. They are the financial
compensations deserved by these provinces to compensate
for generating more electricity with lower carbon emission.
SH and SX would emit more CO2 by generate these
electricity.
3.2.2 SH-SC-SX-GS cooperative carbon-reducing
benefit allocation model
• Table 3-11 Allocation of benefits from cooperative Carbon reducing (108 CNY)
SH
SC
SX
GS
Total
B1: Benefits from carbon reduction
under NCESM
0
0
0
0
0
B2: Cooperation benefit allocation based
on the Shapley value method
6.73
29.93
14.93
7.43
59.02
37.77
-18.25
58.86
-16.83
59.02
31.04
-48.18
43.93
-24.26
0.00
6.73
29.93
14.93
7.43
59.02
B3: Actural benefit from carbon
reduction under the CESM (before
benefit allocation)
B4: Monetary payment to other
provinces: B4=B3- B2
B5: Added benefit from carbon reduction
uner CESM: B5=B2-B1
3.2.2 SH-SC-SX-GS cooperative carbon-reducing
benefit allocation model
• That is, Shanghai would get CNY 6.73×108 by participating
in the CCRM. In the same way, we obtained the benefits
allocation for Sichuan,Shanxi, and Gansu: CNY 29.93 × 108,
CNY 14.93 × 108, and CNY 7.43 × 108, respectively.
4 conclusions
• (1) the paper proposed CESM and CCRM, two more incentive
mechanism, to help improve the current energy-saving mode and
carbon-reducing mode in China.
• (2) Under CCRM, we only considered the benefit from carbon
emission permit trading. In fact, CCRM create benefit from
reducing air pollution and the subsequent health benefit by
generation with low-carbon and cleaner energy. Future research
could extend this analysis to include other benefits.
• (3) It is necessary for the central government to establish efficient
mechanisms about planning, implementing, evaluating, and
coordinating the CESM and CCRM strategy with providing
organizational support for the successful application of CESM and
CCRM.
Thank You!