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How to Set the Allowance Benchmarking for Cement Industry in China’s Carbon Market: Marginal Analysis and the Case of the Hubei Emission Trading Pilot

Author

Listed:
  • Fan Dai

    (College of Environmental Science and Forestry, State University of New York, Syracuse, NY 13210, USA)

  • Ling Xiong

    (Institute for International Studies, CICTSMR, Wuhan University, Wuhan 430072, China
    Research Center for Climate Chang and Energy Economic (CCEE), Wuhan University, Wuhan 430072, China)

  • Ding Ma

    (Research Center for Contemporary Management, Tsinghua University, Beijing 100084, China
    State Grid Energy Research Institute, Beijing 102209, China)

Abstract

Greenhouse gas (GHG) benchmarking for allocation serves as rewards for early actions in mitigating GHG emissions by using more advanced technologies. China Hubei launched the carbon emission trading pilot in 2014, with the cement industry represented as a major contributor to the GHG emissions in Hubei. This article is set to establish a general benchmarking framework by describing and calculating the marginal abatement cost curve (MACC) and marginal revenue and then comparing the different GHG benchmarking approaches for the cement industry in the Hubei Emission Trading Pilot (Hubei ETS) case. Based on the comparison of three GHG benchmarking approaches, the Waxman-Markey standard, the European Union Emission Trading Scheme (EU ETS) cement benchmarking, and the benchmarking approach applied in California Cap-and-Trade program, it is found that; (1) the Waxman-Markey benchmark is too loose to apply in Hubei as it provides little incentive for companies to mitigate; (2) the EU ETS benchmark approach fits the current cement industry in Hubei ETS; and (3) the GHG benchmarking standard in the California Cap-and-Trade Program is the most stringent standard and drives the direction of the future development for Hubei ETS.

Suggested Citation

  • Fan Dai & Ling Xiong & Ding Ma, 2017. "How to Set the Allowance Benchmarking for Cement Industry in China’s Carbon Market: Marginal Analysis and the Case of the Hubei Emission Trading Pilot," Sustainability, MDPI, vol. 9(2), pages 1-15, February.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:2:p:322-:d:91149
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    Cited by:

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    2. Liexun Yang & Peng Zhou & Ning Zhang, 2017. "A Review of Low-Carbon Transformation and Energy Innovation Issues in China," Sustainability, MDPI, vol. 9(7), pages 1-6, July.
    3. Tang, Ling & Wang, Haohan & Li, Ling & Yang, Kaitong & Mi, Zhifu, 2020. "Quantitative models in emission trading system research: A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 132(C).
    4. Jianfeng Guo & Bin Su & Guang Yang & Lianyong Feng & Yinpeng Liu & Fu Gu, 2018. "How Do Verified Emissions Announcements Affect the Comoves between Trading Behaviors and Carbon Prices? Evidence from EU ETS," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    5. Chune Young Chung & Minkyu Jeong & Jason Young, 2018. "The Price Determinants of the EU Allowance in the EU Emissions Trading Scheme," Sustainability, MDPI, vol. 10(11), pages 1-29, November.
    6. Ming Meng & Lixue Wang & Qu Chen, 2018. "Quota Allocation for Carbon Emissions in China’s Electric Power Industry Based Upon the Fairness Principle," Energies, MDPI, vol. 11(9), pages 1-16, August.

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