operation, this could include price floors, contingency reserves or market stability reserves. In
the longer term, price management may be provided through flexible cap management, either
independently or in concert with other
jurisdictions.
A more revolutionary approach to the creation
of units would see an immediate move to more
stringent target conditions and a more rapid
evolution of caps. China could choose to adopt
absolute targets immediately and to make good
any discrepancy that may be caused through
uncertain uncovered sector emissions and covered sector response. Targets would be more
stringent as they transition to reflect required
global mitigation at an earlier stage, while
changes to cap setting and price controls would
also accelerate.
Fig. 61 Sequencing of evolutionary and revolutionary approaches to distribution. Source Vivid Economics
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S. Yaodong and A. Gillespie