EconPapers    
Economics at your fingertips  
 

Allocation of emission permits for China’s power plants: A systemic Pareto optimal method

Xiang Ji, Guo Li and Zhao-Hua Wang ()

Applied Energy, 2017, vol. 204, issue C, 607-619

Abstract: Allocation of emission permits (AEP) is an important issue because of its significant effects on environmental governance and operations management. However, whether AEP results can constantly maintain systemic Pareto optimality still remains unclear and has not been investigated adequately in prior literature. We attempt to fill this gap by dividing the AEP process into a pre-stage observation process and a two-stage regulatory scheme as motivated by recent real-world examples. We apply the characterizations of each stage’s state variables to build a conceptual AEP model based on the classical theory of data envelopment analysis (DEA). Considering different real-world scenarios, we extend this conceptual AEP model into three different AEP models: non-limited, uniform-limited, and heterogeneous-limited AEP models. The allocation schemes derived from each of these three models are proved theoretically to be systemic Pareto optimal in the corresponding scenarios. The advantages of our models over other AEP methods are real-world tractability, enforceability, and systemic Pareto optimality. We further conduct an empirical analysis on allocating SO2 emission permits among mainland China’s major million-KW coal-fired power plants using the proposed models. Results of our empirical study show that the heterogeneous-limited AEP model exhibits higher performance over the non-limited and uniform-limited AEP models. Thus, we suggest that the Chinese coal-fired power industry should employ the heterogeneous-limited AEP model in the practical allocation of SO2 emission permits.

Keywords: Allocation of emission permits (AEP); Environmental management; Systemic Pareto optimality; Data envelopment analysis (DEA) (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306261917309029
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:204:y:2017:i:c:p:607-619

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-09-18
Handle: RePEc:eee:appene:v:204:y:2017:i:c:p:607-619