Abstract
The “cap-and-trade”-based ETS follows two principles for free allowance allocation: “Grandfathering” and “Benchmarking”, which apply to different conditions and objects (Carbon Trading Task Group of CAS Guangzhou Institute of Energy Conversion, Q and A about Design and Practice of Guangdong Emissions Trading Scheme. China Environmental Science Press, 2014, [1]). Grandfathering is a free allocation based on average historical emissions of covered enterprises. It is applicable to the companies (e.g., in chemical and electronics sectors) that have complex process, multiple categories of technologies, and a great variety of products. And, it costs much to gather their emission data. In case of Benchmarking Allocation, the allowances are the production/value of a working procedure or a product, which is multiplied by unit emissions.
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