Open AccessThe impact of carbon trading on China’s renewable energy investment: Case of CDM wind power projects
Author(s) -
Na Fu,
Hailin Mu,
Nan Li
Publication year - 2020
Publication title -
iop conference series. earth and environmental science
Language(s) - English
Resource type - Journals
eISSN - 1755-1307
pISSN - 1755-1315
DOI - 10.1088/1755-1315/446/2/022054
Subject(s) - profitability index , wind power , renewable energy , clean development mechanism , investment (military) , environmental economics , return on investment , natural resource economics , business , economics , finance , greenhouse gas , production (economics) , microeconomics , engineering , ecology , politics , political science , law , electrical engineering , biology
Taking the Clean Development Mechanism (CDM) wind power project as an example, this paper analyses the impact of carbon trading on China’s renewable energy investment. Based on the data of Certified Emissions Reductions (CERs) price and the registered volume of CDM wind power projects in China from 2008 to 2015, the correlation between the investment decision of CDM wind power projects and the carbon trading price is tested. This paper also establishes a profitability evaluation model for CDM wind power projects, calculates the internal rate of return (IRR) of the projects, and uses the benchmark analysis method to evaluate the economic competitiveness and investment attractiveness of the projects with or without the income of CERs. Additionally the sensitivity analysis is conducted for the main investment and income variables. It is concluded that the investment decision of China’s CDM wind power project is closely related to the current carbon trading price, and the carbon trading income is the main method to improve the profitability of renewable energy projects.