An Efficiency Evaluation of the EU’s Allocation of Carbon Emission Allowances

Abstract

The allocation of carbon dioxide emission allowances has become one of the most important global issues. The main argument is the equity in the allocation of emission allowances. If the allocation is unfair, then economic development of some countries will be impeded. Therefore, to promote an emissions trading system, an equitable and reasonable allocation method that benefits every participant country is needed, so that countries will accept and implement the system accordingly.This study uses emission allowance as an input variable for evaluation and analysis. The output variables are energy consumption, government spending, and gross domestic product, based on the model developed by Gomes and Lins (2008). The study takes the zero sum game data envelopment analysis model to explore the allocation of emission allowances and the reallocation of emission allowances among 24 European Union members, hoping to find a comparatively fair and efficient allocation method for them. The empirical results show that first, the current allocation of emission allowances is inefficient. Second, after reallocation, those countries which implemented it most efficiently have more allowances. andThird, after the reallocation, G8 countries including the United Kingdom, France, and Italy have higher allowances than their initial allowences, implying that industrialized countries need more allowances to maintain their economic growth.

Input-Output Analysis for Sustainability by Using DEA Method: A Comparison Study between European and Asian Countries

“…Many studies have indicated a single-direction causal relationship between GDP and CO 2 [25][26][27]. Dinda [28] indicated that there is a two-directional relationship between economic development and environmental pollution.…”

“…Although energy is highly relevant to national security, a degree of privatization can mitigate the bureaucracy typically seen in state-owned enterprises, and enhance the efficiency of market competition through transmission and distribution; moreover, privatization attracts foreign investment and introduces state-of-the-art technologies in energy efficiency. Italy is expected to phase out subsidies and incentives to high energy-consuming industries, and its government encourages the development of carbon emission technologies and improved energy efficiency [25]. Table 2 also summarizes the MTRs in Asia during the research period.…”

Regional-Level Allocation of CO2 Emission Permits in China: Evidence from the Boltzmann Distribution Method

“…At present, most of the international greenhouse gas emission regional decomposition schemes are aimed at the allocation among countries [26], because it is the core issue of the Kyoto protocol. Using the experience of other principles and methods for decomposition method for reference, some scholars have been carrying out the relevant regional decomposition models [27,28], these research results have important reference significance to our study about regional-level CO 2 emission permits allocation.…”

Optimal Path for Controlling Sectoral CO2 Emissions Among China’s Regions: A Centralized DEA Approach

“…Gomes [31] developed the zero-sum game DEA (ZSG-DEA) model, taking CO 2 as the input variable allocated among Kyoto Protocol Contracting Parties-ZSG-DEA was proven to realize technical efficiency for all DMUs after optimization by multiplying an allocation coefficient. Other researchers applied ZSG-DEA, including Serro [32], Wang et al [33], Pang et al [34], and Chiu et al [35], and provided valuable findings; Lozano et al [36] used the centralized reallocation DEA model for emissions allocation. Notable studies on the centralized DEA model were conducted by Wu et al [37], Singh and Majumdar [38], Sun et al [39], Homayounfar et al [40], and Feng et al [41].…”