System dynamics-based effectiveness and sustainability analysis of renewable energy generation policy in China

Abstract

As the Chinese government has promulgated many renewable energy generation policies to reduce carbon emissions and stimulate the renewable energy industry, it is vital to assess the policy effectiveness and extent to which they encourage sustainable renewable energy generation. This paper focused on the most prominent and the best-performing policy mechanisms feed-in tariffs (FIT) and renewable portfolio standards (RPS), and developed a system dynamics model to comprehensively evaluate the effectiveness and sustainability of the renewable energy generation policies. The model clearly shows the complex causal relationships between the related economic and environmental factors, and the policy scenarios were simulated to indicate the future trends and illustrate the coordination processes between polices and compare the development effects. The results show that current FIT has no obvious impact on the sustainable development of renewable energy industry, while under the integrated scenario, the RPS quota growth rate and fines have a significant positive effect after the construction period. The findings also suggest that a FIT-RPS integrated renewable energy generation policy and a perfect RPS trading system should be prioritized, and the RPS quota ratios and fines should be appropriately increased. As various policies cannot be simultaneously implemented because of financial and resource limitations, the proposed system of dynamics-based analysis approach is useful to analyze policy effectiveness and long-term industry sustainability to ensure the provision of optimized policies. It can also provide guidance for similar problems in different areas as well as decision support for further renewable energy generation policy development.