Abstract: Under the background of carbon emission reduction and electricity market reform, the market-based carbon emission reduction policy in power generation industry has a significant impact on the process of electricity market reform and the effect of carbon emission reduction. For this reason, by taking the market-based carbon emission reduction policy in power generation industry as a research object, this paper constructs a system dynamics model based on green certificate trading market, carbon emission trading market, generation right trading market and power market, and analyzes the impact of different policy scenarios on carbon emission reduction and power market. The results indicate that the green certificate trading market has a significant role in promoting the development of renewable energy; the carbon emission trading market has a restraining effect on the development of thermal power, and increases the feed-in tariffs; the generation right trading market can alleviate the rise of electricity price and carbon price, but it will impact the green certificate market, resulting in the decline of green certificate price.