How to prevent the contradiction in the allocation of carbon emission quota and energy quota? Evidence from a modified DEA model

To achieve carbon neutrality by 2060, China must efficiently allocate initial carbon emissions and energy quotas in the power sector. However, prior studies have primarily focused on quota allocation within individual markets and ignored the market development stages. This paper proposes an Energy-Quota and Carbon-Quota Allocation Model (ECAM) that combines an equitable allocation scheme with an efficient allocation scheme based on zero-sum gain data envelopment analysis (ZSG-DEA) through the entropy weight method. The model captures the synergy between the Carbon Emission Trading (CET) and Energy Quota Trading (EQT) markets, as well as their multi-stage dynamics. It is designed to allocate both quotas to the power sector across China's 30 provinces. The findings reveal that provinces with a high proportion of thermal power generation and a high concentration of energy-intensive industries, such as Shanxi and Inner Mongolia, are the leaders in emission reduction responsibilities, while facing significant challenges in reducing energy consumption. Provinces with a high share of clean energy generation, such as Fujian, Hubei, and Guangxi, experience increases in both carbon emissions and energy quotas. The proposed ECAM and our findings can help policymakers develop rational and differentiated energy-saving and emissions-reducing strategies that contribute to the integrated development of the CET and EQT markets and support carbon-neutrality.