The Optimal Carbon Emission Reduction Strategy for Enterprises with Combined Heat and Power Technology

Combined heat and power (CHP) technology increases the flexibility of energy choices for enterprises. This paper focuses fuel mixing way to reduce carbon emission. In the real decision-making procedure, an enterprise takes reduction cost as the utility function, the accumulative emission as the state variable, reduction speed as the control variable. According to the optimal control principle, it turns out that enterprises' optimal reduction strategy is related to the initial quota, price-difference between gas and coal, fault penalty, cumulative emissions and so on. Meanwhile, the marginal reduction cost is not only related to fault penalty, but also is influenced by lots of characteristics of enterprises themselves, which gets closer to reality. The conclusion of the paper can provide guidance to the enterprises needing carbon emission reduction and advice to government on market regulation