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A comparison between emission intensity and emission cap regulations

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  • Hirose, Kosuke
  • Matsumura, Toshihiro

Abstract

We revisit command-and-control regulations and compare their efficiency, particularly an emission cap regulation that restricts total emissions and an emission intensity regulation that restricts emissions per unit of output under emission equivalence. We find that in both the most stringent target case, in which the target emissions level is close to zero, and the weakest target case, in which the target emissions level is close to business as usual, the emission intensity regulation yields greater welfare than does the emission cap regulation. However, in the moderate target cases, an emission cap regulation may be better in terms of welfare than an emission cap regulation because the emission intensity regulation causes over-production. Our results suggest that the efficiency of a policy measure depends on the target level of emissions.

Suggested Citation

  • Hirose, Kosuke & Matsumura, Toshihiro, 2020. "A comparison between emission intensity and emission cap regulations," Energy Policy, Elsevier, vol. 137(C).
    • Handle: RePEc:eee:enepol:v:137:y:2020:i:c:s0301421519307025
    DOI: 10.1016/j.enpol.2019.111115
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    Cited by:

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    3. Xin Li & Fengrong Bi & Lipeng Zhang & Xiao Yang & Guichang Zhang, 2022. "An Engine Fault Detection Method Based on the Deep Echo State Network and Improved Multi-Verse Optimizer," Energies, MDPI, vol. 15(3), pages 1-17, February.
    4. Tang, Chang & Qi, Yu & Khan, Naqib Ullah & Tang, Ruwei & Xue, Yan, 2023. "Ultra-low emission standards and corporate production performance: Evidence from Chinese thermal power companies," Energy Policy, Elsevier, vol. 173(C).
    5. Hirose, Kosuke & Matsumura, Toshihiro, 2022. "Common ownership and environmental Corporate Social Responsibility," Energy Economics, Elsevier, vol. 114(C).
    6. Hirose, Kosuke & Matsumura, Toshihiro, 2024. "Optimal Energy-Saving Investments and Jevons Paradox in Duopoly Markets," MPRA Paper 121836, University Library of Munich, Germany.
    7. Hirose, Kosuke & Matsumura, Toshihiro, 2023. "Green transformation in oligopoly markets under common ownership," Energy Economics, Elsevier, vol. 126(C).
    8. Kai Hu & Dandan Li & Daqian Shi & Wenli Xu, 2023. "Environmental regulation and energy efficiency: evidence from daily penalty policy in China," Journal of Regulatory Economics, Springer, vol. 63(1), pages 1-29, April.
    9. Hirose, Kosuke & Ishihara, Akifumi & Matsumura, Toshihiro, 2024. "Tax versus regulations: Polluters’ incentives for loosening industry emission targets," Energy Economics, Elsevier, vol. 136(C).
    10. Hirose, Kosuke & Ishihara, Akifumi & Matsumura, Toshihiro, 2021. "Tax versus Regulations: Robustness to Polluter Lobbying Against Near-Zero Emission Targets," MPRA Paper 108380, University Library of Munich, Germany.
    11. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Optimality of emission pricing policies based on emission intensity targets under imperfect competition," Energy Economics, Elsevier, vol. 98(C).
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    13. Xing, Mingqing & Tan, Tingting & Wang, Xia, 2021. "Emission taxes and environmental R&D risk choices in a duopoly market," Economic Modelling, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    Near-zero emission industry; Emission cap; Emission intensity; Emission equivalence;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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