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Regulation of Industrial Emissions Based on the Agent-Based Approach

Makarov V.L., Bakhtizin A.R., Sushko E.D.

№6 (54), 2017,  rubric "Modeling and forecast of socio-economic processes".

Makarov, V.L. Regulation of Industrial Emissions Based on the Agent-Based Approach [Text] / V.L. Makarov, A.R. Bakhtizin, E.D. Sushko // Economic and social changes: facts, trends, forecast. – 2017. – № 6. – C. 42-58. – DOI: 10.15838/esc.2017.6.54.3

DOI: 10.15838/esc.2017.6.54.3

Abstract   |   Authors   |   References
The article demonstrates one of the most advanced methods for regulation of industrial emissions, which is used by governments of different countries – an emissions trading system based on the bubble principle. This method is a tool for incentive-based control to encourage businesses to reduce the burden on the environment, providing emissions limits of harmful substances, but at the same time giving them some freedom to choose the methods to achieve the specified emission standards. To create a domestic comprehensive system for emissions regulation it would be useful to use the instruments for preliminary evaluation of effects from the implementation of various control measures. One of such instruments may be the agent-based regional model developed by the authors in the present paper. The model will help test different combinations of control measures – both administrative and market – with the use of computer experiments in order to find a balanced combination. The model simulates production activity of agent enterprises which employ agent people. Apart from products, enterprises also produce emissions keeping within the established limits or exceeding them and paying fees for emission excess. Businesses can also participate in emissions trading, that is, they can sell surplus emissions quotas to other companies or buy the necessary quota if it is cheaper than paying fees. In addition, enterprises can improve emission purification or modernize production achieving dramatic reduction in the content of harmful substances in emissions. The controllable model parameters the user can vary during experiments include the fees for exceeding the enterprises’ quota for emission of various pollutants and requirements to reduce total regional emissions which are represented in the model by corresponding reduction factors. The main difference of the presented agent-based model from other models of this type covered in the literature is the introduction of the planning horizon in the enterprises’ utility function which helps businesses build their strategy to reduce emissions, calculated for several years ahead

Keywords

air pollution; agent-based model; market-based instrument; bubble principle; emissions trading; incentive-based control

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