A Blockchain-Enabled Coalitional Game Framework for Carbon Emission Trading

Many countries have implemented different carbon reduction policies to achieve carbon neutrality in the current century. As one of the popular policies, the cap-and-trade policy provides carbon emission quotas for power generation companies. Each company must carefully determine its energy production based on the carbon emission quota and renewable uncertainty. This paper analyzes the cooperation among different power generation companies using the coalitional game theory. Power generation companies can form a union to share the total carbon emission quotas to maximize their total profit. We show the optimality of the grand coalition by proving that the profit function is superadditive. This result highlights the benefits of cooperation. Besides, we propose a profit allocation mechanism that allocates the total profit to different power generation companies. Furthermore, we prove that the proposed profit allocation mechanism is in the core of the coalitional game such that no group of power generation companies has any incentives to leave the grand coalition. We design a smart contract to enable power generation companies to form a coalition. We further implement the smart contract on the Ethereum platform to validate its effectiveness. Numerical studies have been conducted to validate the established theoretical results.