Abstract:

China's carbon market features two primary trading mechanisms： the mandatory emission reduction mechanism which trades carbon quotas， and the voluntary emission reduction trading mechanism （CCER）. CCER incentivizes various social entities to voluntarily reduce emissions， fostering widespread awareness and contributing to China's goals for green， low-carbon development， and carbon emission reduction. Compared to the established mandatory emission reduction mechanism， the CCER is still in its early stages， particularly concerning the growing trend of supply chain emission reduction cooperation. The impact of the CCER mechanism on the emission reduction strategies of supply chain enterprises still remains uncertain. Given the significant investment， substantial costs and uncertain market returns associated with carbon emission reduction， effective coordination of costs and benefits within the supply chain is crucial for cooperative emission reduction efforts. Hence， it is imperative to investigate the impact of the CCER market's revival on supply chain emission reduction， focusing on cost-sharing and benefit-sharing contracts.To investigate the effects of introducing a voluntary emission reduction trading mechanism in China's carbon market on both emission reduction efforts and enterprise income within the supply chain， a supply chain comprising manufacturers and retailers is examined， and an emission reduction game model is developed， comparing scenarios with and without a voluntary emission reduction trading mechanism. Compared the emission reduction efforts， prices， outputs and profits of the supply chain under three scenarios： No contract， cost-sharing contract and benefit-sharing contract， in the absence of a voluntary emission reduction trading mechanism. This analysis offers enterprises a foundation for decision-making in selecting optimal emission reduction strategies and supply chain cooperation modes amidst the relaunch of the CCER market.Results indicates that， the voluntary emission reduction trading mechanism incentivizes manufacturers to reduce emissions， consequently boosting profits for both manufacturers and retailers under specific conditions. If the CCER trading price falls below the carbon quota trading price， manufacturers may purchase CCER quotas at a lower cost to compensate. Additionally， they can sell surplus carbon quotas in the carbon market， leading them to increase investment in emission reduction to gain a competitive edge. Under these circumstances， the rise in output and demand due to market expansion further motivates manufacturers to invest in emission reduction. Conversely， if the CCER trading price exceeds the carbon quota trading price， the voluntary emission reduction trading mechanism becomes ineffective. In such cases， manufacturers opt out of CCER trading and may fulfill carbon compliance by reducing production or purchasing minimal carbon quotas. Regardless of whether the voluntary emission reduction trading mechanism is implemented， emission reduction efforts and profits are consistently higher under cost-sharing and benefit-sharing contracts compared to scenarios without contracts. Notably， benefit-sharing contracts consistently yield the highest emission reduction efforts and profits， with the added advantage of lower prices. Hence， manufacturers can alleviate compliance pressure and enhance investment motivation for emission reduction by purchasing CCER under specific circumstances. Through the adoption of cost-sharing and revenue-sharing contracts， manufacturers and retailers can mitigate the adverse effects of the double marginal effect， thereby enhancing the overall emission reduction level of the supply chain. When formulating carbon trading policies， the government can base decisions on the disparity between CCER trading prices and carbon quota trading prices. Additionally， the CCER purchase restriction coefficient and the manufacturer's original unit carbon emissions collectively influence the CCER trading price. The government can adjust the purchase restriction coefficient based on manufacturers' carbon emissions， thereby regulating the CCER trading price.

Key words: voluntary emission reduction trading mechanism, CCER, supply chain emission reduction