Research on the initial allocation of sulfur dioxide emissions permits of thermal power industry in Shanxi Province

Initial allocation of emissions permits is the basis of establishing an emissions trading program. This paper contrasted three different allocation modes and analyzed the current situation of thermal power industry. Based on research above, a mixed method was proposed and proved to be applicable to Shanxi province. This mixed method consists of three types, namely, free allocation which is considered as the main choice, pricing sale a supplement, and a public auction when necessary. In addition, according to the generating performance standards, the initial allocation of SO₂ emissions permits for 118 thermal power enterprises and 267 thermal power units in Shanxi province were distributed. The results show the distribution can meet the total-amount-control target: SO₂ emissions will be reduced 15% every five years in the next decade, less than 504,100 tons in 2015, less than 428,500 tons in 2020. By comparing the distribution results of SO₂ emissions permits with the predicted SO₂ emissions of thermal power industry, it came to a conclusion that the situation of emissions reduction is serious and there will be a large market potential in SO₂ emissions trading of thermal power industry in Shanxi province.