A carbon responsibility allocation approach with incentives mechanism based on carbon emissions and carbon offsets accounting

Abstract

This study aims to model the carbon responsibility allocation mechanisms, focusing on the transfer and allocation of carbon responsibility among all industrial sectors and final consumers and taking into account both carbon emissions and carbon offsets. In particular, the study introduces a synergic model of industrial chain carbon emissions and offsets. Then, it proposes a carbon responsibility allocation method with an incentive mechanism. Specifically, extending carbon emissions and carbon offsets both from upstream sources to intermediate users (industries) and from downstream to end users (final use categories). Under this allocation logic, the allocated carbon can be regarded as carbon emission reduction rewards and incentives for each industry. The proposed solution can offset part of their carbon emission responsibilities. In particular, it can provide a new window of rewards and incentives for those industries that produce even a large amount of carbon emissions. At the same, however, the mechanism allows to support the needed innovation to reduce carbon, generate carbon sinks or produce green products. Further, while promoting more coordinated and efficient emission reduction solutions in different connected industrial sectors, it makes the implementation of carbon responsibility allocation, which has been widely concerned, more feasible. Finally, the implementation framework of the carbon responsibility allocation mechanism is proposed. The fishery industry was chosen as a case study. The application of the proposed mechanism to the selected case study shows that carbon responsibility and carbon offsets can be transferred on and allocated across industries and final consumers.