Analysis on China's provincial carbon emission quota allocation based on bankruptcy game

Abstract

A reasonable allocation of carbon emission quotas is essential to improving the national unified carbon trading market. A bankruptcy game model is developed for allocating carbon emission quotas to Chinese provinces based on bankruptcy theory and the Nash bargaining game. The model takes into account the disparities that exist among these provinces. The allocation scheme under the carbon peak target can be obtained by using the projection pursuit model and the subject satisfaction function. The findings reveal that certain eastern provinces bear a greater responsibility in terms of historical carbon emissions. Furthermore, the rampant transfer of carbon emissions from energy-rich to energy-demanding regions has exacerbated the imbalance in regional development. Interestingly, the carbon emission demands are fulfilled in some provinces situated in the coastal regions of the southwest and southeast, such as Beijing, Tianjin, and Fujian. However, certain provinces in the northeast express the lowest levels of satisfaction with their carbon quota allocation, necessitating a greater burden of carbon emission reduction in the future. The research offers significant implications for regional development and carbon reduction efforts.