Optimal Control-based Pricing Of Initial Emission Allowances And Its Policy Effect In China

The payment for initial emission al'lowance(PIEA)policy and emission trading policy has been implemented since 2008 in China in order to attain the target of the total emission amount control and to distribute the initial emission allowance equitably.However,pricing the initial allowance is based on abatement cost or price in emission trading market,and does not take in enterprises' behavior decision mechanisms and the feedback for the applied policy.Meanwhile,the impact of existing related environmental policies on PIEA policy has not been considered.The research takes COD and NH3-N as the research object,based on the optimal control theory,and builds a dynamic game emission pollution allowance pricing model that including the participation of managers and enterprises to describe the enterprises'dynamic feedback mechanism.The pricing model is used to set the optimal pollutants emission level and the corresponding price of emission allowance at the provincial level on the national scale,and to analyze the possible social,economic,and environmental impacts under this price.On this basis,considering the current implementation of the pollutant discharge charging policy and the total control policy,the research designs different policy portfolio scenarios and internalizes them into the dynamic game model to further evaluate the two policies effect on the use of PIEA policy effect.The simulation results show that there are regional differences in optimal emission level and allowance price at the provincial level on the national scale.The optimal COD emissions are relatively high compared with the actual emissions in Zhejiang,Guangdong,Jiangsu,Shandong,Fujian,and Shanghai.The emissions in other regions are lower than the actual emissions.The NH3-N emissions in Hunan,Hubei,Inner Mongolia,Xinjiang,Gansu,and Ningxia have decreased compared with the actual situation.The optimal emissions of other provinces and cities have increased compared with the actual emissions.When the optimal emissions at the provincial level is achieved,the price of COD emission allowance in provinces is within the range of 2,100 to 50,000 RMB/ton,especially Zhejiang,Jiangsu,and Liaoning's price are 50,000 RMB/ton,45,800 RMB/ton,41,200 RMB/ton respectively.The NH3-N emission allowance price is ranging from 0 to 32,800 RMB/ton,of which Zhejiang,Jiangxi,Hebei emission allowance are 32,800 RMB/ton,32,200 RMB/ton and 28,900 RMB/ton respectively.The policy implementation has various influence on the socio-economic development of each region.The social benefits in different regions declined in varying degrees.Especially,the total social welfare of Xinjiang,Jiangxi,Ningxia dropped to 57.3%,55.3%,and 55.0%of actual total social welfare.Mentioning the impact on the industry,the more concentrated industries of COD and NH3-N emission,the greater the impact by the PIEA policy.The industries of chemical raw materials and chemical products manufacturing,agricultural and food processing,textile,papermaking and paper products,metal products,that have more serious water pollution emission problem will be more incline to take additional investment or shut down in order to actively respond to the PIEA policy.In addition,the research analyzes and compares the dynamic consistency of the two methods of collecting fees for one-time payment and installments further on.The results show that there is no dynamic consistency by one-time payment and taking installments can keep the optimal plan for the initial stage of policy design unchanged.Considering the existing policies,pollutant discharge charges and total emission control,those policies can optimize the effectiveness of the paid use policy of emission rights.Through the evaluation and comparison of the separately implemented PIEA policy(Scenario 1),and emission charge and PIEA combination policy(Scenario 2),the result has been found that the existing emission charge is not sufficient to achieve the best emissions.The combination of the policy can achieve the best emissions,and then,there is no significant difference in total social income between the two scenarios.Meanwhile,the price of PIEA will be in the range of 1400 to 49600 RMB/ton and be lower 300-5200 RMB/ton than the price of PIEA.Based on Scenario 1 and Scenario 2,the total emission control policy has been added into the policy combinations.The results show that the total control policy will reduce the total social income in all regions,especially Shandong,Jiangsu,and Yunnan provinces show a decline in total social welfare,which are 12.0%,8.3%,and 6.1%,respectively.On the other hand,the total emission control policy will effectively suppress COD emissions,but it will have no significant impact on the NH3-N emissions.The emission reduction effects of COD in Zhejiang,Guangdong,and Jiangsu are relatively significant,falling by approximately 23.1%,22.2%,and 20.1%,respectively.The best pollutant emission levels in different regions show diversity trends in increase and decrease,which suggest that the policy which making emission control work may not be the same policy in different regions.It can infer that a single environmental policy does not apply to emission control in all regions of China.In the region of which the best emission level is higher than the actual regional total emission cap,the actual total emission cap does play a practical role in restraining emission.For regions with lower optimal pollutants emission,the actual emission cap is loose and maybe does not effectively restrict the pollutants emission.Therefore,the combination of PIEA and total emission control policies maybe can effectively promote the pollutants emission close to the best level.