Low-carbon technology adoption and diffusion with heterogeneity in the emissions trading scheme

Technological change represents a fundamental means to achieve carbon neutrality. However, considering the dual externalities of low -carbon technologies (LCTs), timely and appropriate government intervention is imperative. This study explores the mechanisms and trajectories of low -carbon technology adoption and diffusion in the emission trading scheme (ETS). The proposed agent -based model, using the most recent data from 1057 thermal power firms, created a virtual ETS operation, especially considered the complexities, including various abatement options, heterogeneity among firms and technologies and different trading strategies. The results show that the firms prefer to adopt LCTs with low abatement cost, rather than those with high abatement potential. Meanwhile, the strength of ETS mechanisms is positively correlated with the diffusion of LCTs. This study overcomes the limitations of previous macroscopic studies that fail to explain the diffusion of specific technologies and examines for the first time the dynamic diffusion trends of LCTs with different mechanism designs.