Optimal Carbon Reduction Strategies in the Building Sector with Emission Trading System

Building sector is commonly appreciated as a major contributor to the global warming. Hence, the control of energy consumption and carbon emissions from buildings has received unprecedented attention and concern by Chinese government and practitioners. This study is to present an optimization model to quantitatively assess carbon reduction strategies at enterprise level in building sector under the multi-objective: to achieve regulated carbon emissions reduction target set by government, as well as to realize the minimum incremental costs incurred by carbon emissions. The available alternative carbon emissions reduction strategies considered in this paper comprise adopting or upgrading low-carbon technologies, participating Emission Trading System (ETS) market, and releasing carbon dioxide violating environmental regulations. This work innovatively puts forward mathematical formulas to explore the impact of government environmental inspection on violations and accompanying loss of reputation. A typical four-star hotel in Shenzhen is selected as an actual case to investigate the proposed model based on empirical analysis. The result shows that the amount of non-complying emissions are the highest of 2388.4 tCO2/year, followed by LCT-mitigated emissions are 2112.3 tCO2/year, and yet emissions permits from ETS market are zero. The findings of this study can facilitate building owners formulate more reasonable and cost-effective strategies option to achieve the regulated carbon emissions reduction target.