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Allocating Emissions among Co-products: Implications for Procurement, Offsetting and Border Adjustment

Author

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  • Sunar, Nur

    (University of NC)

  • Plambeck, Erica

    (Stanford University)

Abstract

A state with climate policy may impose a tax on imported products for greenhouse gas emissions that occur in production and transportation to its border (a so-called border adjustment). A buyer may voluntarily commit to offset its upstream supply chain emissions, with similar effect. When a process yields co-products in fixed proportions, how should emissions from the process be allocated among the co-products? We address that question from the perspective of a border adjustment policy maker and buyer, in turn. Emissions and a buyer's profit can increase due to border adjustment, or because a buyer is required to use a higher allocation or pay a higher tax (offset price) per unit emissions.

Suggested Citation

  • Sunar, Nur & Plambeck, Erica, 2014. "Allocating Emissions among Co-products: Implications for Procurement, Offsetting and Border Adjustment," Research Papers 3177, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3177
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    File URL: http://www.gsb.stanford.edu/faculty-research/working-papers/allocating-emissions-among-co-products-implications-procurement
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