Target setting and allocation of carbon emissions abatement based on DEA and closest target: an application to 20 APEC economies

Regarded as an effective method for treating the global warming problem, carbon emissions abatement (CEA) allocation has become a hot research topic and has drawn great attention recently. However, the traditional CEA allocation methods generally set efficient targets for the decision-making units (DMUs) using the farthest targets, which neglects the DMUs’ unwillingness to maximize (minimize) some of their inputs (outputs). In addition, the total CEA level is usually subjectively determined without any consideration of the current carbon emission situations of the DMUs. To surmount these deficiencies, we incorporate data envelopment analysis and its closest target technique into the CEA allocation problem. Firstly, a two-stage approach is proposed for setting the optimal total CEA level for the DMUs. Then, another two-stage approach is given for allocating the identified optimal total CEA among the DMUs. Our approach provides more flexibility when setting new input and output targets for the DMUs in CEA allocation. Finally, the proposed approaches are applied for CEA target setting and allocation for 20 Asia-Pacific Economic Cooperation economies.