The linkage of emissions trading system and green electricity certificate brings economic benefits in China

Market-based instruments are becoming increasingly prevalent as crucial components of energy transition policy packages worldwide. Given the interdependence of these instruments, linkage mechanisms have become a priority for policymakers. However, existing literature primarily focuses on the impacts of individual trading systems, with limited attention paid to linkage trading mechanism. To fill this gap, this study proposes an improved centralized resource allocation data envelopment analysis model to simulate the linkage trading of the emissions trading system (ETS) and the green electricity certificate (GEC) scheme in China. A counterfactual scenario simulation is conducted using historical data from 2016 to 2020. The results indicate that the ETS and GEC schemes and their linkage trading mechanism can generate significant economic benefits for China. The linkage trading system yields cumulative additional GDP gains of 0.36 trillion yuan, equivalent to 0.87 % of the cumulative GDP growth under separate trading system. Annual additional GDP benefits rise progressively from 0.02 to 0.25 trillion yuan. Furthermore, 274.86 million tons of coal equivalent of GEC allowances are used to offset ETS allowances, representing 7.46 % of total GEC allowances. At the provincial level, over two-thirds of provinces use GEC allowances to partially offset their ETS obligations, although the specific offset strategies varied considerably. These provinces fall into four categories based on offset ratios: above 2 % (4 provinces), between 1 % and 2 % (8 provinces), between 0 % and 1 % (11 provinces), and no offset (7 provinces). Sensitivity analyses further confirm the robustness and advantages of the linkage system. Policy implications derived from this study include establishing a time-phased offset upper limit between 3 % and 15 %, adjusting carbon emission accounting methods for electricity consumption, strengthening joint supervision to prevent cross-market manipulation, and reinforcing long-term policy coordination.