Abstract
Reduction of CO2 emissions is increasingly important among countries that want to protect the environment against global warming and climate change. This study examines two methods of CO2 emission reduction—CO2 emission allowance and an international agreement—by applying the Zero Sum Gains Model and the Cooperation and Alliance Model. We conclude that all DMUs reach 100% efficiency after trading on the CO2 emission allowance. The international agreement also improves the average efficiency of all DMUs, but its effect is inferior to the trading of the CO2 emission allowance.
Highlights
An excess of greenhouse gas (GHG) emissions has caused the global climate change that is threatening global ecosystems and impacting human existence
The international agreement improves the average efficiency of all decision making units (DMUs), but its effect is inferior to the trading of the CO2 emission allowance
Carbon dioxide (CO2) is one GHG and controlling its emissions has been ardently regulated by the mechanisms of Clean Development Mechanism (CDM), Joint Implementation (JI), and Emission Trading (ET) in the Kyoto Protocol
Summary
An excess of greenhouse gas (GHG) emissions has caused the global climate change that is threatening global ecosystems and impacting human existence. We introduce the Zero Sum Gains Data Envelopment Analysis (ZSG-DEA) model and the Cooperation and Alliance (CA) model to reallocate the CO2 emission allowance Both models are applied in our paper to estimate the performances of decision making units (DMUs) given the total amount of CO2 emission required by the European Commission. In this paper we propose the ZSG-DEA model to analyze the issue of CO2 emission allowance. Gomes and Lins use the ZSG-DEA model to consider CO2 emission trade in which CO2 emissions are viewed as an undesirable output [10]. In our paper we apply the ZSG-DEA model and view the CO2 emission allowance as a desirable input. We propose examining the allocation of CO2 emission allowance for the 25 member states in the EU
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