The Constraints and Incentives of Carbon Quota Penalty Intensity on Both Parties of Carbon Quota Trading: An ABM Modeling Based on the Power Industry in the National Carbon Market

This study focuses on China's national carbon market and constructs an agent-based artificial carbon market model. It explores the influence of the government's carbon penalty policy setting on the total emission reduction of power enterprises. On this basis, this paper also explores how the penalty policies of different intensities act on enterprises' decisions (accepting penalties, reducing emissions, and engaging in carbon trading) at the micro level, and how they affect the cumulative emission reduction of the entire industry at the macro level. The results include: 1) The carbon penalty policy has influence on the emission reduction path of the power industry. Penalty policies of different intensities will significantly affect the level and growth rate of the number of emission reduction enterprises and enterprises participating in carbon trading; 2) In the early stage of the establishment, a moderate penalty approach (7.5-8.5) should be adopted to maximize the number of enterprises participating in carbon market transactions; in the middle stage of it, more enterprises should be enabled to reduce their dependence on carbon market transactions; in the later stage of it, a severe penalty approach (9.5-10.5) should be adopted to maximize the number of emission reduction enterprises (at the micro level).