IDEAS home Printed from https://ideas.repec.org/p/mtu/wpaper/14_09.html
   My bibliography  Save this paper

Going to the Source: Using an Upstream Point of Regulation for Energy in a National Chinese Emissions Trading System

Author

Listed:
  • Suzi Kerr

    (Motu Economic and Public Policy Research)

  • Vicki Duscha

    (Fraunhofer Institute for Systems and Innovation Research)

Abstract

There are many choices within the design of an emissions trading system. In this paper we focus on one specific aspect – the point of regulation for the energy sector. This choice affects transaction costs; comprehensiveness, and hence the amount of emissions covered and the extent to which the potential cost-effectiveness gains are realised; and credibility of the system. We discuss how an “upstream” energy sector emissions trading system works and present arguments for going upstream (in particular, simplicity of administration) while also discussing arguments for other points of regulation in light of the Chinese circumstances. We present experiences with the New Zealand system, the only system that is entirely upstream for energy, showing ways to address issues that may arise with an upstream system. Ultimately the success of emissions trading depends on markets that operate in a relatively free and competitive way. Simply copying others’ systems to the context of a largely controlled economy such as the Chinese one is likely to be ineffective; each system must be uniquely tailored to local circumstances, possibly in China more than ever before.

Suggested Citation

  • Suzi Kerr & Vicki Duscha, 2014. "Going to the Source: Using an Upstream Point of Regulation for Energy in a National Chinese Emissions Trading System," Working Papers 14_09, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:14_09
    as

    Download full text from publisher

    File URL: https://motu-www.motu.org.nz/wpapers/14_09.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fischer, Carolyn & Kerr, Suzi & Toman, Michael, 1998. "Using Emissions Trading to Regulate U.S. Greenhouse Gas Emissions: An Overview of Policy Design and Implementation Issues," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(3), pages 453-464, September.
    2. Robert N. Stavins, 2008. "Addressing climate change with a comprehensive US cap-and-trade system," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(2), pages 298-321, Summer.
    3. Richard Schmalensee & Robert N. Stavins, 2013. "The SO 2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 103-122, Winter.
    4. Meredith L. Fowlie, 2009. "Incomplete Environmental Regulation, Imperfect Competition, and Emissions Leakage," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 72-112, August.
    5. Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2005. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521023894, November.
      • Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2000. "Markets for Clean Air," Cambridge Books, Cambridge University Press, number 9780521660839, November.
    6. Paul Seabright, 1993. "Managing Local Commons: Theoretical Issues in Incentive Design," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 113-134, Fall.
    7. Elinor Ostrom, 2000. "Collective Action and the Evolution of Social Norms," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 137-158, Summer.
    8. Rogge, Karoline S. & Hoffmann, Volker H., 2010. "The impact of the EU ETS on the sectoral innovation system for power generation technologies - Findings for Germany," Energy Policy, Elsevier, vol. 38(12), pages 7639-7652, December.
    9. Suzi Kerr & Catherine Leining & Justine Sefton, 2012. "Roadmap for Implementing a Greenhouse Gas Emissions Trading System in Chile: Core Design Options and Policy Decision-Making Considerations," Working Papers 12_14, Motu Economic and Public Policy Research.
    10. Rogge, Karoline S. & Schneider, Malte & Hoffmann, Volker H., 2011. "The innovation impact of the EU Emission Trading System -- Findings of company case studies in the German power sector," Ecological Economics, Elsevier, vol. 70(3), pages 513-523, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jessica Coria & Jūratė Jaraitė, 2019. "Transaction Costs of Upstream Versus Downstream Pricing of $$\hbox {CO}_{2}$$ CO 2 Emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(4), pages 965-1001, April.
    2. Fergus Green & Richard Denniss, 2018. "Cutting with both arms of the scissors: the economic and political case for restrictive supply-side climate policies," Climatic Change, Springer, vol. 150(1), pages 73-87, September.
    3. Wang, Xu & Zhu, Lei & Fan, Ying, 2018. "Transaction costs, market structure and efficient coverage of emissions trading scheme: A microlevel study from the pilots in China," Applied Energy, Elsevier, vol. 220(C), pages 657-671.
    4. Coria, Jessica & Jaraite, Jurate, 2015. "Carbon Pricing: Transaction Costs of Emissions Trading vs. Carbon Taxes," Working Papers in Economics 609, University of Gothenburg, Department of Economics.
    5. Catherine Leining & Corey Allan & Suzi Kerr, 2017. "Evolution of the New Zealand Emissions Trading Scheme: Sectoral Coverage and Point of Obligation," Working Papers 17_05, Motu Economic and Public Policy Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Feng & Liu, Xiying & Nguyen, Tue Anh, 2018. "Evaluating the economic impacts and feasibility of China's energy cap: Based on an Analytic General Equilibrium Model," Economic Modelling, Elsevier, vol. 69(C), pages 114-126.
    2. Daniela Kletzan-Slamanig & Angela Köppl, 2000. "CO2 Emission Trading – Instrument einer österreichischen Klimastrategie," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(11), pages 663-673, November.
    3. Stratford Douglas & Seth Wiggins, 2015. "Effects of Acid Rain Regulations on Production of Eastern Coals of Varying Sulfur Content," Working Papers 15-38, Department of Economics, West Virginia University.
    4. Gilli, Marianna & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Innovation complementarity and environmental productivity effects: Reality or delusion? Evidence from the EU," Ecological Economics, Elsevier, vol. 103(C), pages 56-67.
    5. Ruttan, Vernon W., 2006. "Social science knowledge and induced institutional innovation: an institutional design perspective," Journal of Institutional Economics, Cambridge University Press, vol. 2(3), pages 249-272, December.
    6. Wallace E. Oates & Paul R. Portney & Wallace E. Oates & Paul R. Portney, 2004. "The Political Economy of Environmental Policy," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 1, pages 3-30, Edward Elgar Publishing.
    7. ZhongXiang Zhang, 2000. "The Design and Implementation of an International Trading Scheme for Greenhouse Gas Emissions," Environment and Planning C, , vol. 18(3), pages 321-337, June.
    8. Meleo, Linda, 2014. "On the determinants of industrial competitiveness: The European Union emission trading scheme and the Italian paper industry," Energy Policy, Elsevier, vol. 74(C), pages 535-546.
    9. Richard Schmalensee & Robert N. Stavins, 2019. "Policy Evolution under the Clean Air Act," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 27-50, Fall.
    10. Pezzey, John C.V., 2001. "Distributing the Value of a Country’s Tradeable Carbon Permits," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125832, Australian Agricultural and Resource Economics Society.
    11. Brockmann, Karl Ludwig & Heindl, Peter & Löschel, Andreas & Lutz, Benjamin & Schumacher, Jan, 2012. "KfW/ZEW CO2 Barometer 2012: Anreizwirkung des EU-Emissionshandels auf Unternehmen gering – Klimapolitische Regulierung wenig relevant für Standortentscheidungen," KfW/ZEW-CO2-Barometer, ZEW - Leibniz Centre for European Economic Research, number 109796.
    12. Saleh, Jahangir, 2004. "Property rights institutions and investment," Policy Research Working Paper Series 3311, The World Bank.
    13. Robert N. Stavins, 2020. "The Future of US Carbon-Pricing Policy," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 8-64.
    14. Brian R. Copeland & M. Scott Taylor, 2009. "Trade, Tragedy, and the Commons," American Economic Review, American Economic Association, vol. 99(3), pages 725-749, June.
    15. Bel, Germà & Joseph, Stephan, 2018. "Policy stringency under the European Union Emission trading system and its impact on technological change in the energy sector," Energy Policy, Elsevier, vol. 117(C), pages 434-444.
    16. Zhang, ZhongXiang, 1999. "The design and implementation of an international greenhouse gas emissions trading scheme," MPRA Paper 13046, University Library of Munich, Germany.
    17. Ethan Yale, 2008. "Taxing Cap-and-Trade Environmental Regulation," The Journal of Legal Studies, University of Chicago Press, vol. 37(2), pages 535-550, June.
    18. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.
    19. Bushnell, James & Chen, Yihsu, 2012. "Allocation and leakage in regional cap-and-trade markets for CO2," Resource and Energy Economics, Elsevier, vol. 34(4), pages 647-668.
    20. DAUBANES Julien, 2009. "Changement climatique, instruments économiques et propositions pour un accord post-Kyoto : une synthèse," LERNA Working Papers 09.19.295, LERNA, University of Toulouse.

    More about this item

    Keywords

    Emissions trading scheme; point of regulation; upstream; energy sector; China; New Zealand;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mtu:wpaper:14_09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maxine Watene (email available below). General contact details of provider: https://edirc.repec.org/data/motuenz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.