By comparing the dispatch scheme and the market design associated with the renewable energy unconditional priority policy (REUP) and the renewable energy market competitive policy (REMC), the influence on power system CO₂ emission of these two policies as different market balancing scheme is analyzed theoretically. The dynamic that REUP prevents the market mechanism from correctly responding to wind power’s uncertainty is explained. The explanations clarify the conditions causing the over curtailment and under curtaillment for the wind power. It is further demonstrated that the REUP weakens the capbility of a carbon tax to reudce the system CO₂ emission by distorting the price signal and incentives of the carbon tax.