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Joint or separate? An economic-environmental comparison of energy-consuming and carbon emissions permits trading in China

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  • Wang, Yizhong
  • Hang, Ye
  • Wang, Qunwei

Abstract

Environmental permit trading schemes have been widely applied to reduce pollution emissions or resource consumption at the lowest cost. Many environmental permits are interrelated based on the material balance principle. However, it has never been studied for multi-related environmental permits whether the separate trading system or the joint trading system is better. Therefore, this paper proposes new data envelopment analysis models to simulate the joint trading system and the separate trading system. The study then compares the economic-environmental impacts of separate and joint trading systems using the case of the energy-consuming permit (ECP) and the carbon emissions permit (CEP) in China during 2015–2018. From an economic perspective, the total costs of saving energy and reducing emissions are further reduced by the joint trading system. From an environmental perspective, policymakers should note that total energy consumption increases, although total carbon emissions decrease in the joint trading system. Moreover, the joint trading system helps optimize energy consumption structure and decrease carbon intensity. In general, the joint trading system can generate more economic-environmental benefits than the separate trading system. Based on the sensitivity analysis, the advantages of the joint trading system are verified with different coefficients. Therefore, the construction of a joint ECP and CEP trading system should be considered.

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  • Wang, Yizhong & Hang, Ye & Wang, Qunwei, 2022. "Joint or separate? An economic-environmental comparison of energy-consuming and carbon emissions permits trading in China," Energy Economics, Elsevier, vol. 109(C).
    • Handle: RePEc:eee:eneeco:v:109:y:2022:i:c:s0140988322001268
    DOI: 10.1016/j.eneco.2022.105949
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