Carbon Cycle Impact Assessment of Emissions Trading Systems

A mathematical program and carbon cycle model based method is proposed for environmental impact assessment of emissions trading systems (ETS). Carbon market is simulated for carbon positive industry’s cost minimization, using presumed reduction cost and carbon prices, and carbon cycle impact assessment is carried out for selected reduction and/or removal projects. Case study indicates that ETS can drive the industry to reduce net emissions, but in terms of atmospheric CO₂ concentration, reduction of emissions is much more effective than extension of removal. It is also shown that carbon credits are potential emissions, and partial offsetting by low quality credits can cause a sudden increase in emissions in the future. As a result, suggested necessary conditions for ETS to work as intended are, governmental policies that match industrial capabilities, and correct issuance of carbon credits based on carbon cycle impact assessment.