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郭, �.; 陈, �.; 夏威夷花环, �. Carbon Emissions Trading. Encyclopedia. Available online: (accessed on 18 April 2024).
郭 �, 陈 �, 夏威夷花环 �. Carbon Emissions Trading. Encyclopedia. Available at: Accessed April 18, 2024.
郭, 文强, 思琪 陈, 明 夏威夷花环. "Carbon Emissions Trading" Encyclopedia, (accessed April 18, 2024).
郭, �., 陈, �., & 夏威夷花环, �. (2023, June 08). Carbon Emissions Trading. In Encyclopedia.
郭, 文强, et al. "Carbon Emissions Trading." Encyclopedia. Web. 08 June, 2023.
Carbon Emissions Trading

Carbon emissions trading is a market-oriented policy tool aimed at controlling greenhouse gas emissions. It addresses the issue of environmental resource constraints by clarifying property rights and transferring the costs of carbon-dioxide-emitting enterprises to society through market-oriented means. The specific transaction method involves allocating carbon emission rights to various enterprises based on a comprehensive assessment of the environmental capacity and resource status in the region, as well as the total amount of carbon dioxide control. This creates a market where enterprises can trade carbon emission rights.

carbon emissions trading emission reduction carbon trading supply chain green technology innovation

1. Introduction

The carbon emission trading market is a market established based on the Kyoto Protocol. It is controlled by humans and aims to reduce global greenhouse gas emissions [1]. The market mechanism plays a significant role in realizing the reduction of greenhouse gas emissions and promoting China’s double carbon goal (double carbon, which refers to achieving carbon dioxide peaking by 2030 and carbon neutrality by 2060, is a significant goal for China. The abbreviation is derived from the terms ‘carbon peak’ and ‘carbon neutrality’) [2][3]. As the world’s largest carbon emitter, China’s past rapid development has resulted in excessive carbon emissions. In the government work report on 5 March 2023, Premier Li Keqiang proposed to steadily promote energy conservation and carbon reduction while ensuring a safe and stable energy supply and promoting scientific and orderly carbon peaking and carbon neutrality in green and low-carbon development [4]. In contemporary China, promoting green technology innovation and building a green, low-carbon, and circular economic system are essential to achieve pollution and carbon reduction. Thus, reducing carbon emissions and establishing a global carbon trading market is a top priority. Green technology innovation is crucial to transform and upgrade the industrial structure and achieve high-quality development. It is the key engine to achieve the ‘double carbon’ goal [5].
Green technology innovation is a crucial element for upgrading industrial structure and achieving high-quality development. It serves as a key driver for the ‘dual carbon’ goal. Scholars both domestically and internationally have analyzed China’s green innovation from three perspectives: technology, systems, and culture [6]. The industrial low-carbon transformation mechanism for achieving the goal of ‘carbon neutrality and carbon peak’ is a pressing issue for policy-making departments and the manufacturing industry. Can carbon pricing regulations, subsidy policies, and technological innovation incentives promote the realization of these goals in the manufacturing industry? Additionally, can the mutual incentive mechanism of upstream and downstream enterprises in the supply chain promote technological innovation to achieve low-carbon transformation? To address these questions, the academic community must conduct forward-looking research on supply chain emission reduction behavior under the carbon trading mechanism. Understanding the impact of different policies on enterprise emissions reduction efforts is a theoretical issue that requires urgent attention [7].
In recent years, there has been an increase in both domestic and foreign research on carbon trading and supply chains. However, there still remains a gap in knowledge. Domestic research on carbon trading mechanisms primarily focuses on policy design, market operation, and influencing factors. On the other hand, foreign scholars tend to concentrate on the environmental and economic benefits of carbon trading. More research is needed to explore the relationship between carbon trading and other factors.The effectiveness of carbon trading in promoting technological innovation among enterprises for the purpose of energy conservation and emission reduction is contingent upon a confluence of factors, including carbon pricing, tax rates, and subsidies. Alterations to any of these elements within the system may result in changes to the behavioral decisions of enterprises within the supply chain [8][9][10].

2. Theoretical Basis

Participation in carbon emissions trading is voluntary and dependent on an enterprise’s external income and operating costs [11]. Enterprises with lower carbon emission reduction costs can sell their excess carbon emission rights to enterprises with higher carbon emission reduction costs. This allows the former to exceed their carbon emission reduction tasks, while the latter can avoid punishment for not meeting their own carbon emission reduction targets due to insufficient carbon emission rights. Therefore, both companies that choose to reduce emissions and those that choose to acquire them can benefit from carbon emissions trading. The essence of this trading is to allocate environmental resource rights through market mechanisms, thereby achieving the optimal allocation of resources and reducing the total amount of carbon emissions [12]. The carbon emission trading market utilizes the carbon price as a signal to encourage and incentivize companies to conserve energy and decrease emissions. Its goal is to optimize the allocation of carbon emission resources to effectively reduce the overall emission reduction costs of society while adhering to the established carbon emission reduction targets [13][14].
Recent studies on corporate green innovation and carbon trading have focused on various aspects. For instance, Xie, X.M. et al. conducted a longitudinal multi-case study to analyze the internal mechanism of the green transformation evolution process of manufacturing companies. This study enriched the attention-based view on green innovation and provided useful management insights for the green transformation and upgrading of Chinese manufacturing enterprises under the ’double carbon’ goal from a practical perspective [15]. In their study, Hu, Y.F. et al. utilized double differences and analyzed the pilot project of carbon trading as a policy impact. They systematically evaluated the mechanism of carbon trading and discussed the controversy surrounding environmental regulation after its implementation. The researchers suggest that these reforms provide valuable inspiration for future policy decisions [16]. Liao, W.L. et al. conducted an empirical analysis on the relationship between carbon trading pilot, a market-based environmental regulation method, and green economic growth. They concluded that carbon trading can effectively stimulate innovation and promote the growth of the green economy [17]. Feng, C. [18], Li, G.M. [19], Qi, S.Z. [20], Song, D.Y. and colleagues [21] have conducted research on the impact of the carbon emission trading mechanism on the green innovation of enterprises and the green economic growth of industries. Their study provides theoretical guidance and suggestions on how market-oriented policies can better promote corporate low-carbon technology innovation by clarifying the impact mechanism of market and policy factors on corporate green innovation.
The current research on the supply chain issues combined with carbon emission right trading mainly includes the following. Xia et al. [22] have conducted research on the supply chain problem in conjunction with carbon emission trading. Their study involves the construction and comparison of a game model of enterprises under three carbon emission reduction policies based on the authorized remanufacturing model. The researchers have also analyzed the impact of government carbon emission reduction policies on the authorized remanufacturing supply chain. The researchers Wu et al. developed game-theoretic models to examine various modes of carbon emission reduction costs using both historical emission and benchmark methods. They also investigated the effects of different carbon quota allocation methods on relevant variables [23]. The study conducted by Feng et al. [24] examined the impact of carbon emission links and carbon policy changes on the operational decisions of fresh low-carbon supply chains. Specifically, the researchers focused on the scenario where retailers outsource logistics to third-party logistics service providers and producers undertake carbon emission reduction efforts. The findings indicate that the conduct regarding carbon emissions by members of the supply chain will have an indirect impact on the efficacy of carbon emission reduction initiatives undertaken by emission reduction enterprises. This outcome furnishes a dependable theoretical foundation for advancing the growth of a low-carbon fresh food supply chain in China. Guan, Z.M. examined the issue of dynamic optimization and coordination in supply chain collaborative green innovation. The focus was on decision makers who exhibit disappointment avoidance behavior and the dynamic changes in the green level of products [25]. In a low-carbon context, carbon emission rights are considered as a resource input for enterprise production and services, which can generate profits. As a result, the restriction and trading of carbon emission rights will eventually change the industrial structure and profit model of enterprises, ultimately affecting their profitability and production behavior. The low-carbon incentive effect of carbon emission rights varies across different industries. Scholars such as Xie, X.P. [26]; Luo, R.L. [27]; Qin, Y.H. [28]; Ke, L.S. [29]; Pang, Q.H. [30]; Huang, Z.C. [31]; Lu, L. [32]; Zhang, L.R. [33]; and Memari, Y. [34] have conducted research on the optimization of the supply chain under these conditions and provided constructive advice on how to adjust and optimize the carbon trading mechanism for the green transformation of the supply chain.


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