How to Set the Allowance Benchmarking for Cement Industry in China’s Carbon Market: Marginal Analysis and the Case of the Hubei Emission Trading Pilot

Fan Dai, Ling Xiong and Ding Ma
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Fan Dai: College of Environmental Science and Forestry, State University of New York, Syracuse, NY 13210, USA
Ling Xiong: Institute for International Studies, CICTSMR, Wuhan University, Wuhan 430072, China
Ding Ma: Research Center for Contemporary Management, Tsinghua University, Beijing 100084, China

Sustainability, 2017, vol. 9, issue 2, 1-15

Abstract: Greenhouse gas (GHG) benchmarking for allocation serves as rewards for early actions in mitigating GHG emissions by using more advanced technologies. China Hubei launched the carbon emission trading pilot in 2014, with the cement industry represented as a major contributor to the GHG emissions in Hubei. This article is set to establish a general benchmarking framework by describing and calculating the marginal abatement cost curve (MACC) and marginal revenue and then comparing the different GHG benchmarking approaches for the cement industry in the Hubei Emission Trading Pilot (Hubei ETS) case. Based on the comparison of three GHG benchmarking approaches, the Waxman-Markey standard, the European Union Emission Trading Scheme (EU ETS) cement benchmarking, and the benchmarking approach applied in California Cap-and-Trade program, it is found that; (1) the Waxman-Markey benchmark is too loose to apply in Hubei as it provides little incentive for companies to mitigate; (2) the EU ETS benchmark approach fits the current cement industry in Hubei ETS; and (3) the GHG benchmarking standard in the California Cap-and-Trade Program is the most stringent standard and drives the direction of the future development for Hubei ETS.

Keywords: GHG; Cap-and-Trade program; benchmarking; cement industry; Hubei ETS (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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