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An agent-based model for an air emissions cap and trade program: A case study in Taiwan
Hsing-Fu Huang1, Hwong-Wen Ma1
1Graduate Institute of Environmental Engineering, National Taiwan University, Taipei 106, Taiwan.
Journal of Environmental Management
|September 18, 2016
Summary
This study simulated Taiwan's air emissions cap and trade program using an agent-based model. Results show an oversupply but low trading volumes, with pollution fees and offset rates impacting polluter decisions.
Area of Science:
- Environmental Economics
- Environmental Policy
- Computational Social Science
Background:
- Taiwan's air emissions cap and trade program aims to control industrial pollution.
- Understanding polluter behavior and market dynamics is crucial for program effectiveness.
Purpose of the Study:
- To simulate and analyze the emissions trading market in Taiwan's Kaohsiung and Pingtung regions.
- To investigate the impact of program rules on industry emissions reduction and trading behavior.
Main Methods:
- Utilized an agent-based model to create a virtual world simulating regional industries.
- Employed a bottom-up approach to model dynamic behavioral conditions of controlled industries.
- Simulated various scenarios by adjusting program rules, pollution fees, and offset rates.
Main Results:
- The emissions trading market exhibited an oversupply with low actual trading amounts.
- Increased air pollution fees and offset rates reduced agents' trading decisions.
- Nitrogen oxides (NOx) and sulfur oxides (SOx) trading volumes were sensitive to pollution fees, reduction rates, and offset rates.
- Market transparency positively influenced polluters' trading activities.
Conclusions:
- Authorities must carefully adjust pollution fees and program rules to ensure effective market operation.
- Intervention in the emissions trading market requires cautious consideration of rule adjustments.
- Establishing a dedicated trading platform could facilitate successful negotiations among polluters.
