Carbon emission quotas and a reduction incentive scheme integrating carbon sinks for China's provinces: An equity perspective

Abstract

Allocation of carbon emission rights, which is fundamental to incentive mechanisms such as quota trading, carbon sink construction, and emission reduction, and related to the development space of some traditional industries, must balance efficiency and equity with economic benefit and environmental protection. We apply the entropy right method and integrate the four principles of fairness, responsibility, efficiency, and security from an equity perspective to analyze the allocation of carbon quotas among China's provinces. We integrated carbon sinks and carbon emission rights into the same accounting system to comprehensively identify surplus space, and use it to propose carbon offset and carbon emission rights trading scheme. An empirical study of China's provinces revealed that the carbon-sink-based allocation scheme achieved compensation from developed provinces with carbon deficits to less-developed provinces with carbon surplus. From an equity perspective, the emission reduction scheme realizes the original intentions of making developed regions take greater responsibility for emission reduction, giving less-developed regions scope for emission reduction and strengthening penalties for excessive carbon emissions. The findings reflect the direct impact of carbon sinks on carbon emission rights allocation and encourage the construction of carbon sinks while contributing to coordinated regional development.