Title: Estimation of CO2 shadow price in Chinese provinces: an output distance function approach

Authors: Yongrok Choi

Addresses: Department of International Trade and Regional Studies, Inha University, 253 Yonghyun-dong, Nam-gu, Incheon 402-751, Korea

Abstract: As the low-carbon issue become increasingly critical in the world. The marginal abatement cost (shadow price) of CO2 emission is a determinant in the carbon emissions trading market. This paper estimates the CO2 shadow price of different Chinese provinces based on the parametric approach: the output distance function. The results show that the average CO2 marginal abatement cost is 1.8 Y/T (0.28 $/T), much lower than the world carbon market price. If a regional carbon Emission Trading Scheme (ETS) is introduced in China, the market price of CO2 emission will be 0∼12 Y/T.

Keywords: ETS; emission trading scheme; shadow price; output distance function; China; marginal abatement cost; CO2; carbon dioxide; carbon emissions; carbon trading.

DOI: 10.1504/IJISD.2012.047839

International Journal of Innovation and Sustainable Development, 2012 Vol.6 No.3, pp.281 - 289

Available online: 13 Jul 2012

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