A dynamic and continuous allowances allocation methodology for the prevention of carbon leakage: Emission control coefficients

Yongping Sun, JinJun Xue, Xunpeng Shi, KeYing Wang, ShaoZhou Qi, Lei Wang and Cheng Wang

Applied Energy, 2019, vol. 236, issue C, 220-230

Abstract: Carbon leakage has become the core issue of emission trading systems. Using data from Hubei Province, this paper identifies the drawbacks of the prevailing methods for preventing carbon leakage and proposes a new methodology to overcome them, namely, Emission Control Coefficients. In contrast to the common tiered structure method, the Emission Control Coefficients generate a dynamic and continuous emission control coefficient for each industry which will improve the effectiveness and fairness of allowance allocation, set aside sufficient time for the low carbon transformation of industries, and balance the needs to protect competitiveness and decarbonize and are particularly suitable for the emission trading systems of developing counties. This paper makes three main academic contributions: Firstly, it proposes a new indicator, the abatement potential for more effective determining allowance allocation than the prevailing method. Secondly, it better distinguishes industrial differences. Thirdly, it can better respond to the problem of excess allowances that is due to technological advances and trade pattern changes.

Keywords: Emissions trading system; Competitiveness; Carbon leakage; Allowance allocations; Developing countries (search for similar items in EconPapers)
JEL-codes: F18 O13 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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DOI: 10.1016/j.apenergy.2018.11.095

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