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Agent based simulation of carbon emissions trading market

Agent based simulation of carbon emissions trading market,Fatma Mutlu,Nilgun Fescioglu-Unver

Agent based simulation of carbon emissions trading market  
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In this research we examine the supply and demand relationship in a carbon emissions trading market by using agent based system simulation. An agent based system is a computational system that simulates the behaviors of autonomous agents. We model different nations which take place in the carbon trading market as autonomous agents, and these agents act as buyers or sellers in the same trading market. A market-director agent directs the trading between the buyer and seller agents and enables a market mechanism with dynamic auction. This study analyzes the changes in carbon price and the total carbon reduction amount under several different demand scenarios. We used JADE (Java Based Agent Development Environment) as the simulation environment. This paper presents an application of agent based simulation to analyze the carbon trading market. Agent based simulation is a tool to model and analyze the behavior of complex systems composed of autonomous agents. Agents act in an environment, which has policies and interaction protocols that design the communication between agents. Agents may have different behaviors, and strategic goals to achieve. Agents may learn throughout their lifetime, use their knowledge to forecast future events and adapt their behavior accordingly. Energy management related systems involve different interacting components, which can be modeled using multi agent systems and the behavior of these systems under different scenarios can be analyzed using agent based simulation. Kyoto Protocol aims to reduce the greenhouse gas emissions to prevent the climate change. Kyoto Protocol Annex-1 countries are expected to develop clean manufacturing processes to make this reduction. Kyoto protocol also brings three flexibility mechanisms to help countries meet their reduction commitments. ET (Emission Trading) is one of these mechanisms, and it helps Annex 1 regions meet their emission reduction target at a reduced cost (13). One type of emissions trading is carbon emission trading which is specifically for carbon dioxide. A nation buying carbon in the carbon trading market buys the right to burn it and a nation selling it gives up the right to burn it (14). Regions such as Former Soviet Union and Eastern Europe have surplus carbon credits called "hot air" because their emissions are already under the amounts of emissions specified in accordance with the Kyoto Protocol. This paper aims to analyze the supply and demand relationship in the carbon trading market, using agent based simulation approach. The paper is organized as follows: Section 2 presents a short review of recent agent based applications and gives background information on carbon trading. Section 3 presents the carbon trading model and
Published in 2011.
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