DEA-based Organizational Carbon Emission Reduction Management Considering Carbon Trading

The carbon emissions trading system was introduced by China for governing carbon dioxide in 2012.The official launch of the national carbon trading market in 2021 indicates that China’s carbon trading has taken a new development.China’s carbon trading market has a major role in promoting the realization of carbon emission reduction targets.Exploring the organization’s production performance evaluation and the allocation of carbon emission permits in the context of carbon trading is of great significance to the organization’s production improvement and the realization of emission reduction goals.In the context of carbon trading,the traditional production possibility set(PPS)theory cannot reflect the actual production.Based on this,we first propose a new production axiom to construct the PPS considering carbon trading.Then based on Data Envelopment Analysis(DEA),we conduct organizational performance evaluation method,make a fair and effective allocation of carbon emission permit and apply the proposed approaches to the domestic thermal power generation industry.The research conclusions are as follows: First,there will be more room for improvement in technical efficiency in the context of carbon trading,and organizations will have greater potential for emission reduction.Second,efficiency in the context of carbon emission trading will decrease as the price of carbon trading increases,but the emission potential will increase.Thirdly,a carbon emission permit allocation plan that considers the two principles of fairness and effectiveness will be more easily accepted by all organizations.The main innovations and contributions of this paper are summarized as follows: First,considering the background of carbon trading,a new production technology based on traditional DEA is proposed.Second,a performance evaluation method and a new model for measuring emission reduction potential is proposed.Third,the model of carbon emission permit allocation suitable for the context of carbon trading is proposed.Compared with the existing model,the adoption of carbon emission permit trading improves production of DMU,and makes the allocation of carbon emission permits more realistic and easier to be acceptable.Fourth,it is found that prices of carbon trading have an effect on emission reduction potential and efficiency,which helps carbon trading agencies set a reasonable carbon price to stimulate organizations in order to improve performance and reduce emissions.