A Modelling Assessment of the impact of clean development mechanism on electricity generation systems: Case of Shandong Province, China

The electricity generation sector is broadly cited among the most promising domains for implementation of greenhouse gases (GHG) abatement measures intended to achieve the targets set up in the Kyoto Protocol. Meanwhile, considered through the perspective of the Clean Development Mechanism (CDM), the electricity sector offers attractive business opportunities for investment in GHG mitigation projects which may be beneficial for both industrialised and developing countries. This work aims to identify such GHG emissions reduction projects within the electricity sector that can be eligible for CDM. It is assumed that revenues from sale of the certified emission reductions (CERs) would increase competitiveness of the power generation technologies with lower carbon emission rates, thereby altering economically efficient load order and capacity deployment. Possible range of CDM projects as well as economical and environmental benefits from their implementation were estimated using a least cost electricity system expansion planning model PLANELEC-Pro. It is found that in a reference Chinese province of Shandong the Clean Development Mechanism may contribute to the reduction of CO2 emissions by 46.8 million tons (1.64%) compared to the baseline case through the deployment of wind power and advanced clean coal technologies. The total cost of the electricity generation system can be decreased by up to US$ 86 million (0.24%) due to sale of CERs in the international market. Sensitivity analyses were made on the price of CERs which is the main factor having effect on the economical benefits from CDM and the resulting structure of the power generation mix.