Allocation of Regional Emission Permits in China: Based on the Technology of Energy Conservation and Emission Reduction

Abstract

As a large developing country experiencing rapid economic growth, China is facing the dual pressures and challenges of insufficient resources and protecting the ecological environment. However, China is a vast territory, and the spread of regional economic development is extremely uneven. Therefore, the responsibility for emission reductions undertaken by each region cannot be allocated equally. In response to this problem, this study proposes an emission permit allocation model that is built from the perspective of efficiency and energy conservation and emission reduction (ECER) technology. Compared with other models, the model proposed in this study has two innovations. First, the model allows central decision makers to adjust the emission reduction index under various conditions and for various reasons. This further allows the total emissions reduction amounts to be adjusted. Second, the proposed model could also allocate emission permits from the perspective of ECER technology. An empirical study on the allocation of SO2 emission permits at provincial level in China shows the following: (a) The overall ECER level in China is low, and there are significant differences in ECER efficiency in different regions. (b) Significant differences in ECER technologies exist in different regions of China. In particular, the ECER technology standards in China’s northeast region are far below the national average. (c) Each province’s emission reduction targets should be reasonably set, based on actual production conditions. If excessive emission reduction targets are set, it becomes unreasonably difficult to complete the emission reduction task.