Output-based

The second classification is the physical model. Examples are the rigorous modiiles found in chemical-process simulators. In sequential modular simulators, distillation and kinetic reactors are two important examples. Compared to relational models, physical models purport to represent the ac tual material, energy, equilibrium, and rate processes present in the unit. They rarely, however, include any equipment constraints as part of the model. Despite their complexity, adjustable parameters oearing some relation to theoiy (e.g., tray efficiency) are required such that the output is properly related to the input and specifications. These modds provide more accurate predictions of output based on input and specifications. However, the interactions between the model parameters and database parameters compromise the relationships between input and output. The nonlinearities of equipment performance are not included and, consequently, significant extrapolations result in large errors. Despite their greater complexity, they should be considered to be approximate as well. 

For negative pressure less than 20 in. WG, the correction is considered negligible. Referring to Table 12-14C, the correction factors for negative static pressure, at SP in Table, select factor (Fg), the corrected static pressure (SP) = (Fg) (required fan static pressure output based on temperature corrected SPofPar. (a)). 

Output, which depends on the extruded compound. For example, for given compounds extruded with a given extruder, the linked outputs (base 100 for PVC) can roughly be... 

In principle, the two simplest approaches to maximizing the internal effectiveness and efficiency of the scheme are rapidly to phase out free allocations, or to move to relatively uniform output-based benchmarking of allocations, probably based around the performance of best available technology for the sector. 

An allocation that is not differentiated between different fuel types (uniform benchmark, output-based) reduces opportunity costs of emitting C02 and thus reduces the impact on the product price. This reduces incentives to substitute less C02-intensive products, e.g. from cement to wood as a building material, or from electricity consumption to investment in energy efficiency but there is not an incentive to keep plants operating above some minimum threshold purely to get allowances. If such output-based updating allowance allocation is differentiated between production processes and fuel types, then additional distortions create an incentive to increase operation of more C02-intensive fuels and production processes. 

Demailly, D., Quirion, R, 2006. C02 abatement, competitiveness and leakage in the European cement industry under the EU ETS grandfathering versus output-based allocation. Climate Policy 6(1), 93-113. 

Updating with an output-based uniform benchmark... 

Figure 4. C02 emissions and baseload price with updating using an output-based uniform benchmark (GB only, 20/tCO2).

As basing phase II allocation on activities in phase I was discouraged by the EU Directive, some Member States update allocations using output-based fuel-specific benchmarks (FSB), where the benchmark is set higher for coal-fired plants than for gas-fired plants. Here, we assess the impact of this alternative updating method and compare with the output-based uniform benchmark approach. 

On an overall European scale, the results show that updating using an output-based uniform benchmark in the UK, Germany and The Netherlands has a smaller impact on emissions than... 

Figure 6. C02 Emissions with base case, updating using output-based uniform benchmark and output-based fuel-specific benchmark for Europe (EU23+10), England and Wales, Germany and The Netherlands (20 /tCO2, 2008-2012 only).

Figure 9. Effect of various allocation methods on England Wales C02 emissions in period 2008-2012 (assuming fixed C02 price on C02 emissions). NEA = new entrant allocation, UB = uniform benchmark, FS = fuel-specific benchmark, OB = output-based.

Fisher, C., 2001. Rebating Environmental Policy Revenues Output-Based Allocations and Tradable Performance Standards. Discussion Paper 01-22. 

Keywords Grandfathering Output-based allocation Competitiveness Leakage... 

In the latter, labelled output-based allocation (OB), firms receive allowances proportional to their current production level - sometimes known as intensity-based allocation. In its pure form, this allocation method is currently excluded by the Commission, because it amounts to an ex-post adjustment (allocation dependent upon behaviour during the same trading period), but it does incorporate some features of the real-word allocation method. Notably, repeated allocation over sequential periods gives the potential for updating based on output or emissions in the previous period, which offers a weaker (deferred) form of output-based allocation, as detailed in Section 2. The allocation methods used by Member States in phase 1 thus stand somewhere in between our two polar cases, and so are the methods allowed by the directive for phase 2. 

In Section 2, we briefly describe how allowances are allocated in the EU ETS. Section 3 presents a simple theoretical model in order to explain the main differences between grandfathering and output-based allocation. Section 4 describes the applied model and Section 5 describes the scenarios and provides the results of the simulations. Section 6 concludes. 

Output-based allocation (OB), under which firms receive an amount of allowances, proportional to their current production. 

Grandfathering vs. output-based allocation the basic theory... 

The case of pure auctioning can be studied by setting both gf and ob to zero grandfathering, by setting ob to zero and output-based allocation, by setting gf to zero. 

In the second set of scenarios, a firm s allocation is assumed to be proportional to its current cement production. These scenarios are the OB scenarios. In our central OB scenario, the output-based allocation of allowances is assumed to represent, for every firm, 90% of its 2004 emissions per tonne of cement (unitary emissions). This is the OB-90% scenario. 

We observe in Figure 2 that, according to CEMSIM-GEO, technical flexibility allows EU producers to decrease their unitary emission to 90% of their 2004 unitary emission for 20/tCOr It guarantees that the amount of output-based allowances allocated covers their emissions they are neither buyers nor sellers on the C02 market, and their extended cost simply equals their variable production cost. 

Obviously, this result depends on the allocation per tonne of cement for a decreasing allocation, results tend to get closer to the GF case. However, according to the sensitivity test we made, we may consider that the extended cost of EU producers is not highly impacted under OB for amounts of output-based allowances over 75% of the 2004 unitary emission the expected rise10 remains below 10%. 

To underline this point, whereas the extended cost, and therefore the cost-competitiveness of EU firms, is highly impacted under GF allocation, it is not under OB for an output-based allocation, provided that the allocation factor is over 75% of 2004 unitary emissions. 

To sum up, the EU domestic price and the margin over the variable production cost increase very significantly under GF. Under OB, for output-based allocation over 75% of 2004 unitary emission, they are weakly impacted. 

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