Initial Allocation Model of CO2 Emission Allowances Based on the Equity-Efficiency Tradeoff

Abstract

Reasonably and fairly allocating carbon intensity reduction targets among Chinese provinces is a key problem in effectively controlling and reducing CO2 emissions. This study establishes the ZSG-DDF model combining the Zero-Sum Gains DEA and the Directional Distance Function to study the CO2 emission allowance allocations from the perspective of maximum efficiency. This model can discriminate desirable and undesirable outputs and solve the problem of total CO2 emission amount control. Then, we add the equity principle to the constraint conditions, namely, the proportion of carbon emission allowance approaching the proportion of GDP. Finally, we establish a CO2 emission allocation scheme based on the equity-efficiency tradeoff while considering the relationship between economic development and carbon emissions as well as achieving maximum efficiency. We use this new model to allocate CO2 emission allowance during the Chinese 13th Five-Year Plan, and compare it with the other two allocation schemes, including National allocations during the 13th Five-Year Plan, allocation scheme from the perspective of efficiency maximization. The results have a certain significance for government departments to formulate the allocation scheme of CO2 emission allowance.