Industrial carbon abatement allocations and regional collaboration: Re-evaluating China through a modified data envelopment analysis

China’s commitment to significantly reducing carbon emissions faces the twin challenges of focusing costly reduction efforts, whilst preserving the rapid growth that has defined the country’s recent past. However, little work has been able to meaningfully reflect the collaborative way in which provinces are assigned targets on a sub-national regional basis. Suggesting a modified data envelopment analysis (DEA) approach which recognises the two objectives of income maximization and pollution abatement cost minimisation, this paper introduces the potential collaboration between industrial units to the modelling framework. Our theoretical work exposits the roles collectives of industrial decision making units may play in optimising against multiple target functions. Considering the period 2012–2014, we illustrate clearly how China’s three regional collaborations interact with the stated aims of national policy. Developed eastern China may take on greater abatement tasks in the short-term, thus freeing central and western China to pursue the economic growth which will then support later abatement. Policy-makers are thus given a tool through which an extra layer of implementation can be evaluated between the national allocation and setting targets for regional individual decision making units. China’s case perfectly exemplifies the conflicts which must be accounted for if the most economical and efficient outcomes are to be achieved.