Carbon　emission　trading　(CET)　is　a　major　institutional　innovation　to　limit　carbon　dioxide　emissions,　which　has　a　significant　effect　and　influence.　There　are　two　unpaid　quota　allocation　methods　in　CET,　benchmark-based　Vs.　grandfathering.　It　appears　meaningful　to　examine　which　allocation　method　can　make　more　profit　and　less　emission　with　the　implementation　of　electricity　marketization　reform.　Defining　the　allocation　of　the　initial　quota　is　also　one　of　the　basic　points　of　CET.　Accordingly,　this　paper　developed　a　system　dynamics　model　with　different　scenarios　to　simulate　and　evaluate　the　allocation　methods　with　different　unpaid　quotas　in　the　context　of　electricity　reform(EMR).　The　results　show　that　the　grandfathering　method　allocation　can　vitalize　the　CET　market　and　reduce　more　carbon　emissions　per　unit,　which　is　better　than　the　benchmark-based　method　in　terms　of　revenue,　profit,　investment　space,　and　power　generation.　Setting　a　10%　unpaid　quota　is　a　benefit　for　steady　transition.　In　the　long　term,　the　market　on-grid　price　gradually　shows　an　advantage　in　efficiency　and　liquidity.　©　2022　Elsevier　Ltd