Abstract: With the rapid economic development, environmental pollution in Beijing-Tianjin-Hebei region has become an increasingly challenging problem, and low-carbon economy development in the Beijing-Tianjin-Hebei region has aroused a wide attention. As a market-driven mitigation tool, carbon emission trading (CET) can effectively address the climate change and reduce carbon emissions. Based on system dynamics, a CET simulation model considering four sub-systems, i.e., economy, energy, environment, and CET policy, together with their interactive relationships is constructed to capture the impact of CET policy on economy and environment in the Beijing-Tianjin-Hebei system. To study the impact of CET, a baseline case without CET policy and some CET simulation cases with different total allocations, free emissions allocations and carbon prices are set. Empirical results indicate that (1) Generally, CET can effectively promote carbon reduction in the Beijing-Tianjin-Hebei region, even leading to a somewhat negative impact on economy, and (2) less total carbon allowances, less free quotas and higher carbon trading price will consistently enhance the carbon reduction effect, and in the meantime aggravate the impact in economy. The results also provided the effectiveness of the proposed model for capturing the Beijing-Tianjin-Hebei CET system, which can provide helpful supports for the management department in CET design and the related decision making.

Key words: carbon emission trading (CET), system dynamics, Beijing-Tianjin-Hebei region, emissions mitigation, energy policy simulation