Allocation of carbon dioxide emission quotas based on the energy-economy-environment perspective: Evidence from Guangdong Province

Fei Ye; Xianlu Fang; Lixu Li; Yina Li; Ching-Ter Chang

doi:10.1016/j.scitotenv.2019.03.058

Allocation of carbon dioxide emission quotas based on the energy-economy-environment perspective: Evidence from Guangdong Province

Sci Total Environ. 2019 Jun 15:669:657-667. doi: 10.1016/j.scitotenv.2019.03.058. Epub 2019 Mar 5.

Authors

Fei Ye¹, Xianlu Fang¹, Lixu Li², Yina Li¹, Ching-Ter Chang³

Affiliations

¹ School of Business Administration, South China University of Technology, Guangzhou 510640, China.
² School of Business Administration, South China University of Technology, Guangzhou 510640, China. Electronic address: li.lixu@foxmail.com.
³ Department of Information Management, Chang Gung University, 259 Wen-Hwa 1st Road, Kwei-Shan, Tao-Yuan 333, Taiwan, ROC; Department of Thoracic Medicine, Chang Gung Memorial Hospital at Linkou Taoyuan, Taiwan, ROC; Department of Industrial Engineering and Management, Ming Chi University of Technology, Taiwan, ROC.

PMID: 30889453
DOI: 10.1016/j.scitotenv.2019.03.058

Abstract

As one of the most important environmental control mechanisms in China, the Emissions Trading Scheme (ETS) is set to alleviate the contradictions among the energy-economy-environment (3E) system and achieve the sustainable development goals (SDGs), while any such scheme requires an initial allocation of carbon dioxide emission quotas. However, the current allocation method dominated by the grandfathering approach does not reflect this original intention well. Integrating the 3E goals with the quota allocation issue, this paper established a dual-objective programming model that considered both the economic and energy goals, while the environmental goal was reflected in constraints. Evidence from Guangdong Province revealed that the 3E approach was superior to the grandfathering approach in some respects. When the weight given to the energy goal was within a certain interval, the 3E approach could simultaneously optimize the total abatement cost and emission efficiency, which not only reflected the "polluter pays" principle but also avoided the possibility of windfall profits from the redundant quota. In other cases, the 3E approach could unilaterally improve the energy or economic goal to reflect decision preferences. Finally, the findings of this paper have important implications for policy makers seeking to develop new regulations for the national ETS.

Keywords: Carbon dioxide emission quotas; Dual-objective programming model; Emissions trading scheme; Energy-economy-environment system.