Research On Initial Allocation Of Carbon Emission Permits

Climate change is a great challenge for mankind today.Many countries are actively taking action to reduce carbon emissions.In July 2015,China announced the "Intended National Determined Contributions"(INDC),which defined the emission reduction targets in 2030: reach carbon dioxide emissions peak around 2030 and strive to reach the peak as soon as possible;carbon dioxide emissions per unit of GDP decreased by 60-65% compared with 2005,which made an important contribution to the Paris Agreement.At the end of 2017,China launched the national unified carbon trading market on the basis of pilot projects.In the report of the Nineteenth National Congress of the Communist Party of China,China clearly pointed out that we should lead international cooperation in tackling climate change and become an important participant,contributor and leader in the construction of global ecological civilization.As one of the three flexible mechanisms to achieve the global emission reduction targets stipulated in the Kyoto Protocol,the carbon emission trading mechanism plays an important role in reducing carbon dioxide emissions,reducing the average cost of emission reduction and conducting the national energy saving policies and emission reduction policies.Initial permit allocation of carbon emission rights is the premise of the development of carbon emission trading market.Changing from the administrative allocation of emission quantification indicators to the cap control,initial permit allocation plays an important role in the carbon trading mechanism,and contributes to realize the goal of greenhouse gas emission control at a lower social cost.Permit allocation is crucial to achieving China’s emission reduction targets and realizing sustainable development of China’s regional economy.Therefore,the allocation of China’s initial carbon emission permits is not only an important institutionalarrangement in the development of low carbon society,but also an objective requirement for building a unified domestic carbon emission trading market.Therefore,the object of this study is "initial permit allocation of carbon emission rights".Based on the reality,the method of combining qualitative research and quantitative research is used.This paper systematically summarizes the characteristic of EU ETS and China’s pilots market,comparatively analyzes the cap setting path,and permit allocation methods,and a fair model of permit allocation based on five influencing factors is constructed to study the problem of permit allocation among provinces in China.Five indexes affecting permit allocation in industrial sectors are put forward,and the carbon emission permit of industrial sectors in China is analyzed based on information entropy model.Finally,it puts forward the key issues and policy recommendations of the permit allocation system in China.(1)The experience from EU ETS and China’s pilot markets.Firstly,the characteristics of initial permit allocation of EU ETS are discussed in detail from the aspects of historical evolution,cap setting,allocation scope,allocation methods,allocation among member states,stabilization mechanism and flexible mechanism.Secondly,it discusses the development process,construction and operation of China’s carbon market,focusing on the analysis of permit allocation methods of the pilots.Finally,the ARMA-GARCH model is used to analyze the volatility of China’s carbon permit price.It is found that the carbon market price presents the characteristics of peak and heavy tail,volatility and aggregation.It is necessary to establish a unified carbon market trading criteria,improve the liquidity of the carbon market and maintain the coherence of carbon market policies.(2)The cap setting and allocation methods of carbon emission permits.Based on the analysis of the theoretical model,the path and the level of cap setting,this paper puts forward the permit allocation path of "top-down,down-top combination" and the multi-level allocation mode of "state-province-sector-enterprise".This paper analyzes in detail the historical method based on the rolling base year,the output-based benchmark method,the multi-agent based permit auction method and its theoretical model.A comparative study is carried out on the applicable conditions and economiceffects of the four basic permit allocation methods,such as the grandfathering method,the benchmark method,the auction method and the fixed price method.The importance of harmony optimization.Finally,it puts forward the importance of the combination and optimization of quota allocation methods.(3)The initial permit allocation among provinces.On the basis of the analysis of the factors influencing the fair distribution of inter-provincial quotas,such as interpersonal equity,development stage,historical responsibility,emission reduction cost and current responsibility,a multi-factor model of inter-provincial permit allocation is constructed,and the results of inter-provincial permit allocation with fair priority are calculated.On this basis,I choose the SBM-DEA model to optimize the results of the distribution,further explore the regional distribution characteristics of carbon quotas,and finally propose that we should put importance to the regional capital allocation effect of carbon quotas,and promote the coordinated development between regions.(4)The initial permit allocation among industrial sectors.The information entropy model of industry permit allocation is constructed by choosing five indexes such as historical cumulative carbon emissions,industry output value,industry carbon intensity,technology input and export degree.And the weight of index matrix and distribution coefficient are calculated.The results show that five industries,including ferrous metal smelting and calendering,chemical raw materials and chemicals manufacturing,non-metallic mineral products,power,thermal production and supply,petroleum processing,coking and nuclear fuel processing,have the highest carbon emission allocation coefficient and also the highest carbon emission quota allocation.On this basis,the pressure of emission reduction in these industries is further analyzed and suggestions for development are put forward.(5)The key issues and suggestions for the construction of initial allocation system of carbon emission permits.Based on the above studies,this paper puts forward some policy suggestions for the construction of the initial permit allocation system of carbon emission rights in China.We should strengthen the top-level design of the cap to achieve the goal of carbon emission control and optimize thecombination of permit allocation methods to reduce the cost of social emission reduction.We also should allocate the regional initial permit fairly to achieve the goal of regional coordinated development,and coordinate the permit allocation among industries to promote industrial upgrading.Importantly,we should improve the carbon emission accounting system which is the foundation of initial allocation of carbon emission rights.