Research on the Initial Configuration Scheme of China’s Carbon Market Based on Carbon Emission Reduction Target Constraints

Under the “Double Carbon” goal, incorporating the principles of equity, efficiency, and responsibility into the initial regional allocation of carbon emission rights is the key to promoting and optimizing China’s carbon trading market. This paper first defines the net carbon transfer responsibility between regions, then calculates the regional carbon allowance scheme based on the principles of equity and efficiency, as well as integrating principal. Our study shows that: (1) the provinces which transfer out carbon emissions are dominated by Jiangsu, Zhejiang, Shanghai and carbon trading pilot regions, while the provinces which transfer in are dominated by Shanxi, Hebei and Inner Mongolia. (2) Considering only the principle of equity will reduce the incentive for carbon emission reduction in regions with high emission reduction efficiency, such as Beijing, Shanghai and Guangdong; while considering only the principle of efficiency will exacerbate the pressure to reduce emissions in Xinjiang, Shanxi, Inner Mongolia and other high carbon emission regions. (3) Compared with equity and efficiency principle, integrated principle not only takes into account multiple factors, but also reduces the cost of carbon emission reduction among regions, which is more in line with China’s “dual-carbon” strategy.