Carbon emission quota allocation of high energy consumption industries in undeveloped areas – A case study of Inner Mongolia Autonomous Region

Abstract

With the approaching of the target year of carbon peak, all world countries have gradually strengthened carbon emission reduction actions. However, most of the undeveloped countries or regions do not belong to the Annex I countries in the Kyoto Protocol, and the development of carbon emission trading mechanisms is relatively slow. Therefore, setting emission quota standards for industries in underdeveloped regions is necessary. Considering the principles of fairness, efficiency, and sustainability, we establish a “multi-objective information entropy allocation model” (i.e., IEMMA method) for underdeveloped areas. Take China's Inner Mongolia Autonomous Region as an example, and the allocation results show that: (1) The “historical emissions”, “carbon emission intensity”, “cumulative emissions”, “energy structure”, and “energy intensity” are assigned higher weights. Such industries will carry a higher responsibility for emissions reductions, they should gradually transfer emission quotas to industries with smaller historical emissions to increase enthusiasm for reducing emissions. (2) Compared with the historical emissions allocation scheme, the IEMMA model can increase the emission limits for industries with large historical emissions. For industries with relatively small emissions, their emission quotas can be appropriately relaxed to promote the sustainable development of the industry. (3) Under the allocation scheme of the IEMMA model, the difference in the reduction of carbon emission intensity of different industries is small. Carbon emission intensity becomes a relative emission reduction indicator, which reflects the fairness of allocation while maintaining economic development. (4) The “quota gap” formed by the allocation plan of the IEMMA model is large, which is conducive to promoting the active emission reduction of high-emission enterprises. Larger “allowance gaps” are conducive to increasing the activity of the carbon trading market. In summary, the IEMMA model is conducive to achieving long-term emission reduction goals in underdeveloped regions and is more suitable for the allocation of quotas to high energy-consuming industries.