PhD student Ru Li, funded by China Scholarship Council, went to the Swiss Federal Institute of Technology Lausanne (EPFL) in October 2019 to carry out a joint study. In February 2020, the COVID-19 epidemic broke out in Europe. EPFL campus was closed and the research team adopted the "Work from Home" model. Under the leadership of foreign tutor Professor Philippe Thalmann, team members conduct online academic exchanges every Friday, mainly discussing economic activities and climate change, climate change mitigation and adaptation, national and international climate policies, energy system transition and so on.

Online academic exchange

　　The 23rd Annual Conference on Global Economic Analysis, scheduled to be held in Tokyo, Japan, from June 17-19, 2020, has been changed to an online event due to the COVID-19 outbreak. The conference analyzed the global economy beyond 2020 under the themes “Achievements in SDGs”, “Challenges of regional integration and globalization”, “Income distribution impact of economic policy” and “Globally coordinated common tools of economic analyses”. At the meeting, Ru Li, Dr. Sigit Perdana and Dr. Marc Vielle reported the latest collaborative research, and had active exchanges and discussions with domestic and foreign scholars. Central to the aims of the Paris Agreement, a multilateral coordinated action through integrated carbon markets has been a practical bottom up option for effective and efficient mitigation. This paper quantifies the welfare effects of potential integration of Emission Trading Scheme (ETS) between the European Union (EU) and China. The analysis is performed up to the year 2040, assessing the economic and welfare impacts for China and 28 EU Member States. The results show that the integration of the Chinese and European trading markets is beneficial for both the EU and China. China’s gains from the term of trade and the emission quota are exceeding a higher deadweight loss for more emission abatement under the integrated market scenario. Welfare cost from abatement decrease to some notable countries in which ETS constitutes a large part of their economies such as Poland, Romania, the Czech Republic, and Croatia. For a few others such as the Netherland, Lithuania, Ireland, and Estonia face an unavoidable higher welfare cost because of the dominance effect of loss from trade. Spatial sectoral analysis, however, finds that the linkage significantly minimizes the loss of competitiveness of the EU energy-intensive industries. International leakage under the coordinated market is also rather small by market integration, which further confirms the potential of ETS as an effective instrument to facilitate multilateral coordination in global mitigation. Limiting trade to 30 per cent is likely to be a politically acceptable policy if both markets be integrated. Limiting the trade of quotas to this threshold captures most of the welfare gain coming from CO2 trading for the EU. The critical point is 50 per cent limit for the EU, as no significant change in the EU welfare and the gain from trade above this level. China’s welfare, in contrast, is linearly correlated to the trade limit, thus full trade is preferable.

Online report of the 23rd Annual Conference on Global Economic Analysis