LAUSR

Abstract In order to effectively curb the rapidly-increasing energy consumption in manufacturing industry, China has clearly stated in Made in China 2025, to reduce energy consumption per unit of industrial added value of the manufacturing by 18% in 2020 and 34% in 2025 relative to the 2015 level. Based on the ZSG-DEA and CAT models, this paper attempts to establish an efficiency-oriented energy-consuming right trading system (ECRTS) to design the energy allocation scheme along with the energy trading scheme for China’s 18 manufacturing sectors in 2020 and 2025. We find sectors with the allocated energy-consuming right could not only reach the DEA efficiency frontier, but also upgrade their energy-consuming mix. Further, the allocation scheme considering the sectoral heterogeneity is more rational as it relieves the pressure on some sectors to conserve energy. Finally, by integrating energy offsetting mechanism into the united energy market, the energy trading mechanism designed in this work can largely simplify the transaction process and improve the after-trading efficiency for all target sectors.