PLANT-LEVEL EVALUATION OF CHINA’S NATIONAL EMISSIONS TRADING SCHEME: BENCHMARK MATTERS

Rong Ma and Haoqi Qian
Additional contact information
Rong Ma: School of Economics, Fudan University, Guoquan Road 600#, Shanghai 200433, P. R. China

Climate Change Economics (CCE), 2022, vol. 13, issue 01, 1-25

Abstract: China’s national emission trading scheme (ETS) started operating in 2021 after four years of preparation. In the initial stage of national ETS, benchmarking approach is one of the hottest topics that have gained sufficient attention. For the reason that benchmarks will greatly affect the permits allocation results and thus affect the effectiveness of the carbon market. This paper attempts to investigate the impacts of the benchmark designs of China’s ETS by using plant-level data. Main results show that the current lax benchmark standards adopted by the national ETS will lead to excess surplus of permits. The whole carbon market will achieve market clearance only when the benchmark standards are set as high as the top 2% efficiency levels. If the carbon price is 200yuan/ton, the annual trading volume will be 16.4 billion yuan and 13.2 billion yuan in extra will be spent on carbon offsetting for compliance. If the auction mechanism is introduced, the total market size will significantly increase. The auction revenue will exceed 300 billion yuan when 50% of permits are allocated through auction and will exceed 600 billion yuan when all permits are auctioned. These revenues can provide sufficient funds to accelerate China’s low-carbon transformation as well as improve social welfare.

Keywords: Emissions trading scheme; permit allocation; benchmarking approach; policy design (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S2010007822400097
Access to full text is restricted to subscribers

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:wsi:ccexxx:v:13:y:2022:i:01:n:s2010007822400097

Ordering information: This journal article can be ordered from

DOI: 10.1142/S2010007822400097

Access Statistics for this article

Climate Change Economics (CCE) is currently edited by Robert Mendelsohn

More articles in Climate Change Economics (CCE) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().