Abstract: In this paper an emission-dependent supply chain system consisting of one single upstream emission-dependent manufacturer and one single downstream retailer is considered. Because its profit increases caused by the increased demand of low carbon consumption, retailer may conduct different contracts in order to promote the emission-dependent supplier to expand reduction investment. Therefore, two kinds of contract, which is called reduction increment income sharing contract and reduction investment cost sharing contract will be designed. Through the establishment of the two agents' Stackelberg game model, the optimal abatement levels and sharing rates can be obtained under the two different contracts, and two agents' optimal profits can also be calculated. The results show that reduction investment cost sharing contract can make the emission reduction more thoroughly and the obtained emission level is higher; in the reduction investment cost sharing contract, the two agents' profit will be increased; but in the reduction increment income sharing contract, the two agents' profit increments may be determined according to relevant parameters. Finally, based on the reasonable data the conclusions are verified, and the price of carbon emission permit and other related parameters' sensitivity can be analyzed.

Key words: carbon emission regulation and trade, emission reduction, reduction income sharing contract, reduction cost sharing contract, sharing rate