Carbon quota redistribution and subsidy incentives for China's provinces: Balancing efficiency and regional equity

Achieving China's dual carbon goals requires balancing emission reduction efficiency with regional equity. This study proposes a methodological innovation that dynamically couples the Zero-Sum Gains DEA (ZSG-DEA) with GCAM-China, forming an iterative feedback framework that enables endogenous provincial carbon quota optimization. Four progressive policy scenarios are simulated to evaluate their impacts on carbon emissions, energy structure, and regional disparities. Results indicate that while efficiency-oriented quota allocation improves national mitigation efficiency, it leads to carbon price increases exceeding 100% relative to the national average in central and western provinces. Conversely, a carbon price–triggered subsidy mechanism effectively reduces costs in high-burden regions and alleviates distributional tensions. Provinces demonstrate distinct policy responses: Ningxia (Tight quota with active reduction) experiences significant carbon price declines due to quota tightening and subsidies; Jilin (Low quota with mild transition) shows persistently high prices and slow structural adjustment; Guangdong (High quota with stable emissions) maintains low carbon inertia owing to its stable energy and industrial structure. These differences reflect underlying variations in resource endowment, power system capacity, and industrial pathways. To address regional heterogeneity, we propose an “efficiency-oriented quota with dynamic subsidies” mechanism that enables refined, phase-specific adjustments. The findings provide empirical insights for enhancing China's carbon market design and underscore the importance of region-specific policies in achieving an efficient and equitable low-carbon transition.