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.
California's cap-and-trade programme under the Assembly Bill 32 is a key element in California's comprehensive plan for reducing its greenhouse gas (GHG) emissions to 1990 levels by 2020. In China, separate local cap-and-trade pilot schemes are being developed to explore a market-based solution for addressing the country's increasing GHG emissions. The Californian cap-and-trade scheme and China's local pilots are similar in that both have been developed in the absence of a national emissions trading scheme. This paper reviews the Californian scheme and draws insights for China's pilots from various perspectives including the legal basis, institutional arrangement, programme structure, market design, the implementation process, and mechanisms for ensuring compliance.
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