Initial allocation of SO₂ emission rights based on the combination weighting method: evidence from China's thermal...

Emission trading system is an effective market-oriented means to control pollutant emission, and reasonable initial allocation of emission rights is the premise of its smooth implementation. However, at present, the initial allocation of emission rights depends largely on the amount of emissions, which leads to weak positive guidance effect for enterprises. To explore the optimal initial allocation method of SO₂ emission rights, this paper takes 8 thermal power plants in Dalian, China, as the research objects to calculate the initial allocation of SO₂ emission rights, because SO₂ is the main cause of acid rain, which is one of the most serious air pollution in China, and thermal power plants are among the main SO₂ emitters. Firstly, an indicator system is established considering enterprise size, pollutant discharge, and social contributions, as well as pollution control capacity. Then, the combination weighting method is developed through integrating the subjective methods G1 and G2 with the objective ones, entropy and maximum deviation. The empirical results show that the enterprises with more desulfurization equipment or large heating supply are supposed to get more emission rights; the actual emission value of SO₂ in half of the enterprises exceeds the theoretical ones; SO₂ removal rate, desulfurization equipment quantity, and heating supply exert the most positive effects on the initial allocation of emission rights. The constructed model can be used as a reference for future research of initial allocation of other pollutants' emission rights. Also, the implications have been proposed for the government, industry, and enterprises.