The pass-through mechanism for carbon emission cost under ETS with different accounting principles: a focus on construction supply chains

As carbon trading policies implemented through emission trading schemes increasingly influence both upstream and downstream segments of construction industry supply chains, participants exhibit varied cost transmission behaviours contingent upon different carbon emission accounting principles. Employing a strategic game-theoretical model, key cost transmission mechanisms were identified for carbon emissions within construction supply chains in response to the constraints placed upon them by carbon policy prescriptions under certain accounting frameworks. The analysis yielded several critical insights: Firstly, under market equilibrium conditions, competitive material suppliers and building owners demonstrate nearly identical cost transmission trajectories when applying the same accounting principle. Secondly, notable disparities exist between direct and indirect cost transmission rates across different account principles. Thirdly, under a production-based accounting framework, carbon emission costs propagate from material suppliers toward building owners; conversely, under consumption-based and shared accounting approaches, these costs propagate in reverse. Finally, the investigation revealed that heightened sensitivity of owners to construction product prices mitigates carbon emission cost transmission, while increased in market competition among construction products exacerbates such cost transmissions. These findings present pivotal information upon which essential guidance for stakeholders can be formulated, aiding in the selection of appropriate carbon emission accounting methodologies and refining the design of emission trading markets within construction supply chains.