Horizontal CO₂ Compensation in the Yangtze River Delta Based on CO₂ Footprints and CO₂ Emissions Efficiency

In this study, we attempted to reduce the negative economic externalities related to Carbon Dioxide (CO₂) emissions in the Yangtze River Delta region (YRD) and designed a cross-municipality responsibility-sharing mechanism.

We estimated the municipal CO₂ footprints in the YRD from 2000 to 2019 based on nighttime light data and measured CO₂ emissions efficiency using a super slack-based measurement (super-SBM) model. Based on this, we designed a scenario of horizontal CO₂ compensation among the YRD's municipalities from the perspectives of both CO₂ footprints and CO₂ trading (CO₂ unit prices in trading were determined based on CO₂ emissions efficiency).

The results showed the following: (1) The CO₂ footprints evolution of the YRD municipalities could be divided into four categories, among which, eleven municipalities showed a decreasing trend. Thirteen municipalities stabilized their CO₂ footprints. Thirteen municipalities exhibited strong growth in their CO₂ footprints, whereas four municipalities maintained a low level of slow growth. (2) Spatially, CO₂ emissions efficiency evolved from a broad distribution of low values to a mosaic distribution of multi-type zones. (3) After 2011, the ratio of CO₂ footprint compensation amounts to local Gross Domestic Product (GDP) in most municipalities was less than 0.01%, with its center of gravity shifting cyclically. It was appropriate to start charging the CO₂ footprint compensation amounts after 2011, with a dynamic adjustment of 3 years. (4) After 2007, the supply-demand relationship of CO₂ trading continued to deteriorate, and it eased in 2016. However, its operational mechanism was still very fragile and highly dependent on a few pioneering municipalities.

In this study, we designed a horizontal CO₂ compensation mechanism from the binary perspective of CO₂ footprints and CO₂ trading. In this mechanism, the former determines the CO₂ footprint compensation amounts paid by each municipality based on whether the CO₂ footprint exceeds its CO₂ allowance. The latter determines the CO₂ trading compensation amounts paid by the purchasing municipalities based on their CO₂ emissions efficiency. This system balances equity and efficiency and provides new ideas for horizontal CO₂ compensation.