What is the logic of providing credits at all? Why not just tax emissions and let the market sort out which economic activities are most favored? I think credits would create a kind of shelter for some unfavorable economic activities.
Consider: I impose a blanket emission tax on smoke. Everyone has to expend various efforts to reduce their smoke emissions. If the tax does not reduce emissions enough, I raise it higher. Eventually the smokeless fires prevail. The smoky fire users are mightily disadvantaged.
But wait, I also create a smoke tax credit system. So some previously advantaged smoke fire users have the resources to buy credits and continue emitting smoke. They buy credits instead of investing in low-smoke technology. Their inefficiencies are perpetuated and the air remains smoky.