Study On Total Amount Control And Quota Allocation Of Regional Carbon Emissions Market In China

2013 is the first year of China’s carbon market. The foundation of China’s carbon markets is extremely important to the development of carbon finance. As a market-based project to lower carbon emission, the carbon-emission-right trading mechanism starts with overall control and initial distribution, which means the government fixes an annual carbon emission cap for the controlled areas beforehand, then divides the overall cap up and distributes carbon allowance to the controlled units with prescriptive methods and procedures. The design of overall control and initial distribution relates to the problem of “small-area-equity” faced by carbon trading pilot areas, especially in the aspects like system designing and industry choice. What’s more, The design of overall control and initial distribution relates to the consideration of emission-reduction cost and equity of all areas of China, which equals the problem of “huge-area-equity” which including the representation of pilot areas and the allocation of the carbon emission resources. Only by formulating a proper plan of overall control and initial distribution which suits to the local circumstances and the state of the carbon trading system, can we obtain a reasonable carbon price and achieve the planned low-carbon goals with low cost.First of all, this paper introduces the circumstances of China’s seven carbon market’s overall control and initial distribution, summarizes the steps of overall cap setting as three steps: calculating the carbon budget of local area under the restriction of carbon intensity, defining the coverage of carbon trading system, estimating two kinds of the carbon budget related to the enterprices in and out of the system. The design of initial distribution could be sorted out in three models: ”historical emission method + baseline method” model、”historical emission method+ baseline method + auction” model、historical emission reporting model. Further more, the availability of the markets、system designing、industry extending are analyzed in details.Secondly, this paper divides 31 provinces and municipalities of China into high-carbon area、middle-carbon area 、 low-carbon area. In the view of decoupling degree, the condition of high-carbon area is getting worse, when the middle-carbon area’s is becoming better annually. In the low-carbon area, some provinces and municipalities have been in the condition of strongly decoupling. From the caculation above, we confirm which provinces to choose to add to the carbon trading pilots. To make sure the overall cap of pilot provinces and the distribution of national carbon allowance, this paper caculate the Gini index of total carbon emission、carbon emission per capita、carbon intensity, thus providing evidence for efficiency-based allocation of carbon allowance.Here are some conclusion and achievement of this paper: in the area which carbon trading mechanism has been estabilished, we should narrow the gap between foreign advanced markets and our’s, especially in the aspects like the goal of overall control, the usage of baseline method, the proportion of auction allowance. We should take the transportation into account and try to put this industry into the system. Tianjin Municipality and Guangdong Province could add the category of the industry restricted by the system. Nationally, we should pay more attention to the high-carbon area in the process of pilot extension or the foundation of countrywide carbon market, and choose them to make low-carbon experiments firstly. Because China’s provincial carbon space is still in a reasonable section, we advice that in the distribution of carbon allowance, we should give priority to efficiency with due consideration to fairness, which means that the littoral area with higher economic development and carbon efficiency should be given more allowance, thus decreasing the costs of low-carbon economic transition and improving the whole market efficiency.