Can decentralized optimal decision mechanism help balancing tradeoff between carbon mitigation and regional inequality?

National decarbonization goal will be decomposed to regions since 2025 to realize Nationally determined Contributions (NDC) in China. However, literature shows that decomposition of mitigation obligations may cause spatial inequalities due to substantial heterogeneity across regions and cities. Especially under global optimization decision mechanism, policymakers often struggle to balance the tradeoff between achieving national mitigation goals and addressing regional inequality. This study develop a multi-regional CGE-based policy analysis framework, which can examine the role of decentralized optimization decision mechanism and adaptive responses for balancing regional inequality and decarbonization. Taking Zhejiang province----the unique demonstration zone of common prosperity in China as a case study, we find that mitigation obligation decomposed based on fairness is conducive to reduce regional inequality because of industrial structural transition and efficiency improvement induced by adaptive response in less developed regions. The findings offer useful insights into achieving both decarbonization and spatial justice through decentralized governance scheme.