How carbon emission quotas can be allocated fairly and efficiently among different industrial sectors: The case of Chinese industry

Abstract

Emissions trading schemes (ETS) have been treated as a cost-effective mitigation measure to effectively control carbon emissions. Industrial carbon emission quota allocation is prior to the implementation of ETS. This study takes industrial sectors in China as a case to apportion carbon emission quotas. An informational entropy and multiple-factor mixed weighting allocation model (IEMMA) was established by considering fairness, efficiency, and feasibility from 4 aspects, i.e., emission reduction responsibility, emission reduction potential, emission reduction capacity, and industrial features. The allocation results among industrial sectors present many differences, and averaging a weighting allocation scheme is more feasible than other allocation schemes considering the fairness, efficiency, and feasibility. This study not only advances the existing literature on the issue of sectoral carbon emission quota allocation, but also provides a significant reference for China’s policymaking in ETS implementation.