Research On The Distribution Method Of Initial Emission Permits

Tradable emission permits has been carried out in many counties now and has shown itsbetter effect in curbing environmental pollution. Since2007, China has set up this kind ofnational pilot projects in11provinces gradually. The research work on tradable emissionpermits abroad mainly focus on several aspects: the allocation of initial emission rights, theallocation and trade of emission rights between regions, its supervision problem and tradableemission permits in the presence of the market powers. The most disputed issue is the allocationof initial emission rights. Because it not only concerns enterprise’s cost, but also influences theinterests of the related social groups, and it can largely determine the operational efficiency oftradable emission permits.This paper first describes the tradable emission permits andinvestigates the allocation of initial emission rights.On the allocation of initial emission rights, there are several types, such as freedistribution，auction，pricing。No matter in equity availability or earnings, auction is superiorto the other two. So this paper focuses on the common types of auction and points out thatascending auction is superior to sealed-bid auction. On ascending auction, Ascending clockauction and Ausubel auction are recommended by some scholars. Of them, Ausubel auction as anew modified mode is created to deal with the problem of bid shading. The relevant research iscomparatively lesser. Based on some relevant scholars’ research, this paper supposes a duopolymarket and then establishs an analytical model involving market of tradable emission permitsand product market. Under the given market conditions, we take ascending clock auction andAusubel auction as examples, simulate the auction process and then compare the outcomeresulting from these two different types of ascending auction. It proves that the auctionmechanism can distribute emission rights effectively, making the manufacturer producing morepollution get much more emission rights,which means more payment on environmentalprotection, and gain less market share and earnings at the same time. Compared with ascendingclock auction, Ausubel auction results in a situation that the manufacturer will gain higherearnings, but government’ auction revenues will be lesser.In the practice of establishing the emissions trading auction, Zhejiang Province has the leadin China, preliminary establishing the emission rights trading market and some relevantmanagement organizations. this paper will take Zhejiang Province as an case in the end, andthen discuss the practice of the initial emission rights trading auction in China, try to establishthe emission rights trading system adapting to China’s conditions. The research shows that nowour country don’t have the qualifications to auction the allocation of emission rights on a largescale, we should carry forward the initial emissions trading auction gradually.