To read the full version of this content please select one of the options below:

Motivating individual carbon reduction with saleable carbon credits: policy implications for public emission reduction projects

Jiayuan Han (College of Business, Shanghai University of Finance and Economics, Shanghai, China)
Lingcheng Kong (School of Business, East China University of Science and Technology, Shanghai, Shanghai, China)
Wenbin Wang (College of Business, Shanghai University of Finance and Economics, Shanghai, China)
Jiqing Xie (College of Business, Shanghai University of Finance and Economics, Shanghai, China)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 5 May 2022

Issue publication date: 16 May 2022

71

Abstract

Purpose

A public emission reduction project offers saleable carbon credits to encourage individual residents to participate in activities with low carbon emissions: if the residents participate, they will earn carbon credits that can be sold to polluting firms for carbon offsetting. This study explores the economic and environmental implications of these projects.

Design/methodology/approach

The authors develop a multiperiod model to incorporate the decisions of individual residents and a polluting firm. The model captures residents' difference in estimating the price of carbon credits: A proportion of residents are naive residents who shortsightedly take the previous market price of carbon credits as the basis of their decision-making.

Findings

A public emission reduction project can improve the cost-efficiency of carbon reduction, increase both the profit of the polluting firm and consumer surplus, but may hurt the welfare of the participating residents. Reducing transaction costs of carbon credits may cause a greater loss to participating residents. As the ratio of naive residents decreases, the overall welfare of participating residents increases and the number of participating residents decreases.

Practical implications

To encourage more residents to reduce carbon emissions, the project should be promoted to new areas (e.g. rural areas) where there are more naive residents. Although reducing transaction costs is an effective way to increase the economic viability of the project, the government should pay attention to protecting the welfare of residents, and educating residents is an effective way to improve their overall welfare.

Originality/value

This paper is the first to reveal the economic and environmental implications of public emission reduction projects.

Keywords

Acknowledgements

This paper is supported by the Key Program of National Social Science Foundation of China (Grant No. 20AJY008). The authors contributed equally to the paper and author names are in alphabetical order.

Citation

Han, J., Kong, L., Wang, W. and Xie, J. (2022), "Motivating individual carbon reduction with saleable carbon credits: policy implications for public emission reduction projects", Industrial Management & Data Systems, Vol. 122 No. 5, pp. 1268-1305. https://doi.org/10.1108/IMDS-12-2021-0764

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

Related articles