Carbon emission performance evaluation and allocation in Chinese cities

Abstract This paper presents a DEA approach with multiple abatement factors to evaluate CO 2 emission performance and allocate CO 2 emission quotas in Chinese cities. We first consider the difference of marginal abatement costs among cities, and construct the non-radial directional distance function with multiple abatement factors. The total-factor CO 2 emission performance index and its dynamic change index are then proposed to measure CO 2 emission performance. Considering equity and efficiency, we develop a composite index by the hybrid method to allocate emissions quota, which considers CO 2 emissions as well as CO 2 emission performance. Then we conduct an empirical study using inputs and outputs dataset of 71 Chinese cities in 2005–2012. Chinese cities have poor energy efficiency and still have high CO 2 emissions. The eastern region outperforms the central region and the western region performs worst, whereas the dynamic CO 2 emission performance of the central region has the largest increase. The change of CO 2 emission performance is driven mainly by technological advances. As for the CO 2 emission allocation, the composite index method encourages cities to reduce emissions and enhance emission performance through carbon trading market. It also motivates cities with high historical emissions to reduce their emissions by improving technology when they have poor CO 2 emission performance.