The Impact of Carbon Quota Benchmark Allocation on Cement Company Competitiveness: A System Dynamics Approach

Abstract

The cement industry, as a high energy-consuming industry, has been included in the carbon emissions trading system (ETS) in the context of the carbon neutrality goals. Benchmark allocation of carbon quotas may have a significant impact on cement companies. To study this impact, we constructed a system dynamics (SD) model for a cement company with the three subsystems of “demand and production”, “economic efficiency”, and “carbon emission and carbon trading” based on company competitiveness theory. A company competitiveness index was established from the SD model. Through computer simulation, the influence of the annual decline coefficient of the benchmark value and the innovation investment rate on a cement company’s competitiveness under different circumstances were compared and analyzed. This study puts forward suggestions for low-carbon development, such as setting a reasonable range of annual decline coefficient of the benchmark value (0.97–0.99) and promoting investment in emission-reduction technologies in multiple phases.