Incentive model for enterprises based on carbon emission intensity

Abstract

A pilot scheme for a carbon emissions trading market has been launched in China. Some problems within the market include insufficient incentives, inefficient emissions reduction, and inequitable distribution. While previous studies adopted a state or provincial level perspective to examine such issues, little research has focused on enterprises at a business level. This article proposes a new incentive model that aims to resolve these problems. This model was developed while considering the carbon emission intensity of enterprises and cooperative game theory. According to the advanced value and average value of carbon emission intensity, the model classifies enterprises into three regions. The quota in the second year is related to its own emission intensity and the number of enterprises located in the region, which not only stimulates the enthusiasm of the enterprise to reduce emissions, but also serves to encourage more enterprises to participate in emission reductions. This article presents a study of 16 textile enterprises in Shandong Province. Depending on the model's calculation, the quota can be redistributed. Different emission intensity brings different emission reduction costs, which can intuitively show different responsibilities. The result is fairer and more reasonable than distributions that are based on a historical emissions quota.