Abstract:

In the primary market of carbon trading，government allocates the carbon allowance to the subjects under the regulations，
under the premise of total amount control of carbon emissions. The initial allocation of carbon allowance includes method
with compensation and one without compensation. Starting from the study of China’s seven pilot provinces of initial allocation
methods of carbon allowance，this paper analyzes the types，and the advantages and disadvantages of initial allocation of carbon
allowance. With allocation method with compensation，government auction is generally held and the legal relationship between
the government and regulation subjects of carbon emission is administrative contract relationship. Allocation method without
compensation follows grandfathering principle and baseline principle，and the legal relationship between the government and
regulation subjects of carbon emission is administrative licensing relationship. The author suggests that the government should
choose the most suitable carbon trading legal relationship in primary market. When creating legal relations，the government
not only needs to emphasize its initiative and mandate，but also to demonstrate diversity and flexibility of relief approaches in
dealing with disputes.

Key words: carbon trading, carbon allowance, initial allocation method of carbon allowance, administrative license in carbon
allowance, regulation subjects of carbon emission