Carbon emission quota allocation among China’s industrial sectors based on the equity and efficiency principles

• Published in: Annals of operations research Vol. 255; no. 1-2; pp. 117 - 140
• Main Authors: Zhang, Yue-Jun, Hao, Jun-Fang
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.08.2017; Springer; Springer Nature B.V
• Subjects: Analysis; Business and Management; Business enterprises; Capital cost recovery allowances; Carbon; Combinatorics; Efficiency; Emissions (Pollution); Emissions control; Emissions trading; Energy management; Environmental aspects; Indicators; Laws, regulations and rules; Operations research; Operations Research/Decision Theory; Price elasticity; Quotas; S.I.: Energy and Climate Policy Modeling; Theory of Computation; Weighting; Weighting methods; China; Equity; ZSG-DEA model; Carbon quota allocation; Industrial sectors; Efficiency
• ISSN: 0254-5330; 1572-9338
• DOI: 10.1007/s10479-016-2232-2

The carbon emission of China’s industry accounts for more than 70 % of the total in the nation, thus the implementation of carbon emission quota trading in industry is of great importance to realize China’s national carbon emission reduction targets. Meanwhile, the allocation of carbon emission quota among sectors or enterprises proves the first and critical step. For this reason, this paper constructs a comprehensive index combined with the subjective, objective and linear combination weighting methods to allocate carbon emission quotas among the 39 sectors of China’s industry in 2020 based on the level of 2015, and employs the input-oriented ZSG-DEA model to examine the efficiency of allocation solutions in 2020. The results indicate that, first, when carbon emission reduction capacity, responsibility and potential are considered for the comprehensive index of carbon emission quota allocation, the mitigation responsibility plays a relatively higher role than other two indicators. Second, all of the subjective, objective and linear combination weighting methods can be used for effective allocation of carbon emission quotas, and the former two methods have less advantage in light of efficiency. Third, six key industrial sectors are respectively allocated over 500 million tonnes of carbon emission quotas in 2020, which together account for 91.77 % of the total in the industry. Finally, the final carbon emission quota allocation solution reflects both the equity and efficiency principles and achieve the Pareto optimal state.