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Initial Allocation of Emissions Trading Among Sub-regions in China

In: Empirical Research on Environmental Policies in China

Author

Listed:
  • Yiyi Ju

    (Waseda University)

  • Kiyoshi Fujikawa

    (Aichi Gakuin University)

Abstract

In the context of the 2060 carbon-neutral pledge, the Chinese emission trading scheme (ETS) is gaining importance in its role as a national market-based climate policy instrument. The design of a national ETS market necessitates an approach whereby initial allowances can be allocated, considering equity in regional growth, notably electricity transmission and emission relocation among regions. This study investigated five adjustment approaches for initial allowance allocation, including the adjustment between emissions generated from energy use (energy consumption-based) and emissions induced by the consumption of final goods and services (final consumption-based), as well as adjustments based on three economic indicators, namely per capita gross domestic product, ability to pay, and cost-effectiveness. Based on the Input-Output table for 30 regions in 2012 and emission data from 2015, for the same total amount of CO2 mitigation, the energy consumption-based and final consumption-based allocation approaches resulted in significantly different regional allocations. These disparities provided important information to aid future adjustment of the initial allowance allocation of sub-regions in China. An appropriate emission allocation should consider different allocation principles to expedite the shift towards energy-saving technologies and lifestyles in energy-intensive regions (e.g., Jiangsu, Beijing, and Guangdong), as well as to support CO2 emission reductions in electricity supply regions (Shanxi and Inner Mongolia).

Suggested Citation

  • Yiyi Ju & Kiyoshi Fujikawa, 2023. "Initial Allocation of Emissions Trading Among Sub-regions in China," Springer Books, in: Kiyoshi Fujikawa (ed.), Empirical Research on Environmental Policies in China, chapter 0, pages 111-121, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-5957-0_7
    DOI: 10.1007/978-981-99-5957-0_7
    as

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