Intercity carbon compensation mechanism based on value-added captured responsibility allocation.

Intercity trade in China generates significant embodied carbon transfers. Cross-border production can easily lead to carbon leakage, complicating the attribution and accounting of intercity emission responsibility. In both traditional methods (such as the "Production-Based Accounting" (PBA) and the "Consumption-Based Accounting" (CBA)), there are parties that benefit while others that face greater disadvantages. The shared responsibility approach could be perceived as fairer. We propose a novel "Value-Added Captured Responsibility Allocation" (VCRA) scheme that can be applied at the city level, using a multi-regional input-output model to equitably distribute emission responsibility between producers and consumers according to their ability to capture value-added along the value chain. Furthermore, we combine the emission responsibility allocation with carbon abatement cost to establish an intercity horizontal carbon compensation mechanism to mitigate carbon inequality caused by intercity trade. The results show that underdeveloped and resource-intensive cities such as Yulin (60.8%) bear a higher share of responsibility for export-related emissions. VCRA results fall between CBA and PBA, but cities like Tianjin, which exports high-value-added products, show significantly higher emission responsibility than PBA and CBA. Many underdeveloped cities have significantly higher producer responsibilities than consumer responsibilities, such as Karamay and Yulin, where producer responsibility accounts for 92.7% and 88.2% of the total, respectively. Reductions in the direct input-output coefficient increase the share of emission responsibility. The distribution of emission responsibility remains stable even when final demand fluctuates due to macroeconomic uncertainty. Economically developed cities such as Beijing, Shanghai, and Chongqing are usually net payers of carbon compensation. The disparity in carbon shadow prices leads to incomplete consistency in the spatial distribution of carbon compensation amounts and values. Fair and reasonable trade-embodied carbon emission responsibility allocation and compensation mechanisms are crucial for advancing synergistic emission reductions and achieving carbon neutrality.