[China's Provincial Horizontal Carbon Compensation Mechanism Based on Power Carbon Transfer]

Area of Science:

• Environmental Economics
• Climate Change Policy
• Regional Development

Context:

• Provincial carbon compensation mechanisms are crucial for sustainable development and achieving carbon neutrality goals in China.
• China's 31 provinces were analyzed to understand carbon transfer and establish a horizontal compensation system.
• Existing mechanisms require refinement to ensure fairness and effectiveness in addressing inter-provincial carbon flows.

Purpose:

• To establish a fair and reasonable horizontal provincial carbon compensation mechanism for China.
• To measure carbon transfer volume, identify compensation subjects/objects, and determine compensation standards using CO2 shadow prices.
• To allocate carbon emission responsibilities and realize provincial carbon compensation through fiscal transfer theory.

Summary:

• Calculated a national average CO2 shadow price of 1,944.84 yuan/t, influenced by economic development and industrial structure.
• Determined a total provincial carbon compensation of 54.202 billion yuan for 2021, with 12 provinces receiving compensation and 19 paying.
• Revealed a spatial distribution of carbon compensation from east to west, highlighting regional disparities in carbon emissions and economic activity.

Impact:

• Provides a scientific basis for constructing a provincial horizontal carbon compensation system in China.
• Offers insights into the economic implications of carbon transfer and the financial flows required for compensation.
• Supports balanced regional development and contributes to the achievement of national carbon peaking and neutrality targets.