Identifying the driving forces of national and regional CO2 emissions in China: Based on temporal and spatial decomposition analysis models

This study explores the driving forces of the changes of national and regional CO₂ emissions using temporal decomposition analysis model, and investigates the driving forces of the differences of CO₂ emissions between China's 30 regions and the national average using spatial decomposition analysis model. The changes or the differences in national and regional CO₂ emissions during 2000–2014 are decomposed into nine underlying determinants. Temporal decomposition results show that economic scale effect is the dominant driving force leading to the increases in both national and regional CO₂ emissions, while energy intensity effect is the main contributor to the reduction of CO₂ emissions. Contribution of various variables to CO₂ emissions between eastern region and central region are roughly same. Spatial decomposition results demonstrate that the differences of CO₂ emissions among China's 30 regions are expanding increasingly. Economic scale effect is main driving force responsible for the difference in CO₂ emissions among regions, and energy intensity effect, energy structure effect and industrial structure effect are also important factors which result in the increasing differences in regional CO₂ emissions. In addition, resource-based and less developed regions have greater potential in the reduction of CO₂ emissions. Understanding CO₂ emissions and the driving forces of various regions is critical for developing regional mitigation strategies in China.     

Energy and CO2 emissions performance in China's regional economies: Do market-oriented reforms matter?

This paper employs a newly developed non-radial directional distance function to evaluate China's regional energy and CO₂ emission performance for the period 1997–2009. Moreover, we analyze the impact of China's market-oriented reform on China's regional energy and carbon efficiency. The main findings are as follows. First, most of China's regions did not perform efficiently in energy use and CO₂ emissions. Provinces in the east area generally performed better than those in the central and west areas. By contrast, provinces in the west area generally evidenced the lowest efficiency. Second, Market-oriented reforms, especially the promotion of factor market, were found to have positive effect on the efficiency of energy use and CO₂ emissions. Third, the share of coal in the total energy consumption and the expansion of the industrial sector were found to be negatively correlated with China's regional energy and CO₂ emissions performance. Based on the empirical findings, we provide policy suggestions for enhancing energy and carbon efficiency in China.     

Regional differences in the CO2 emissions of China's iron and steel industry: Regional heterogeneity

Identifying the key influencing factors of CO₂ emissions in China's iron and steel industry is vital for mitigating its emissions and formulating effective environmental protection measures. Most of the existing researches utilized time series data to investigate the driving factors of the industry's CO₂ emission at the national level, but regional differences have not been given appropriate attention. This paper adopts provincial panel data from 2000 to 2013 and panel data models to examine the key driving forces of CO₂ emissions at the regional levels in China. The results show that industrialization dominates the industry's CO₂ emissions, but its effect varies across regions. The impact of energy efficiency on CO₂ emissions in the eastern region is greater than in the central and western regions because of a huge difference in R&D investment. The influence of urbanization has significant regional differences due to the heterogeneity in human capital accumulation and real estate development. Energy structure has large potential to mitigate CO₂ emissions on account of increased R&D investment in energy-saving technology and expanded clean energy use. Hence, in order to effectively achieve emission reduction, local governments should consider all these factors as well as regional heterogeneity in formulating appropriate mitigation policies.     

Structural decomposition analysis of the carbonization process in Beijing: A regional explanation of rapid increasing carbon dioxide emission in China

Methods to control China's CO₂ emissions under its rapid economic development process have received much attention. As the top industrialized and urbanized region in China, Beijing is a good case to show the trends of CO₂ emissions in China, and examining how different drivers influence the CO₂ emissions direction of Beijing can give valuable insights to other regions on dealing with the emerging climate change issues. To this end, we conducted structural decomposition analysis to quantify the contributions of technological and socio-economic factors to the rapid CO₂ emissions growth in Beijing from 1995 to 2007. An increasing final demand level and production structure change led to carbonizing Beijing significantly, while energy intensity improvement was Beijing's sole prominent source on decarbonizing its economic development in 1995–2007. Further, results highlighted the importance of trading and investment in CO₂ emissions variations in Beijing. The industrial structure change toward heavy manufacturing and services sectors led to the significant role of these sectors in CO₂ emissions growth in Beijing. Beijing's carbonizing process is a reminder to other regions in China to reconsider the direction of their industrial structure change and implement consistent and strict energy-saving policies.     

Effective ways to reduce CO2 emissions from China's heavy industry? Evidence from semiparametric regression models

Using China's province-level panel data from 2005 to 2017, this article uses a semiparametric regression model to investigate CO₂ emissions in China's heavy industry. Empirical results show that while economic growth exerted carbon reduction effects in the eastern region, it stimulated the growth of CO₂ emissions in the central and western regions. This is mainly due to regional differences in industrial structure and the high-tech industry. Energy efficiency has made a greater contribution to reducing CO₂ emissions in the central region because the R&D investment and patent rights granted in this region has grown faster. The energy consumption structure has a more complex impact. It exerts a “pulling first, then restricting” (Ո-shaped) nonlinear effect on CO₂ emissions in the eastern and western regions, but an inverted “N-shaped” effect in the central region. This is mainly due to the differences in the composition of energy consumption across regions. Environmental regulations have a positive “U-shaped” nonlinear impact on CO₂ emissions in the eastern and western regions. It means that environmental regulations help cut down CO₂ emissions in the early stage, and the facilitation effect gradually disappears at the later stage. Conversely, environmental regulations produce an inverted “U-shaped” impact in the central region.     

Factors influencing CO2 emissions in China's power industry: Co-integration analysis

More than 40% of China's total CO₂ emissions originate from the power industry. The realization of energy saving and emission reduction within China's power industry is therefore crucial in order to achieve CO₂ emissions reduction in this country. This paper applies the autoregressive-distributed lag (ARDL) co-integration model to study the major factors which have influenced CO₂ emissions within China's power industry from 1980 to 2010. Results have shown that CO₂ emissions from China's power industry have been increasing rapidly. From 1980 to 2010, the average annual growth rate was 8.5%, and the average growth rate since 2002 has amounted to 10.5%. Secondly, the equipment utilization hour (as an indicator of the power demand) has the greatest influence on CO₂ emissions within China's power industry. In addition, the impact of the industrial added value of the power sector on CO₂ emissions is also positive from a short-term perspective. Thirdly, the Granger causality results imply that one of the important motivators behind China's technological progress, within the power industry, originates from the pressures created by a desire for CO₂ emissions reduction. Finally, this paper provides policy recommendations for energy saving and emission reduction for China's power industry.     

Spatial spillover effects in determining China's regional CO2 emissions growth: 2007–2010

This study proposes an alternative input–output based spatial structural decomposition analysis to elucidate the importance of domestic regional heterogeneity and inter-regional spillover effects in determining China's regional CO₂ emissions growth. Our empirical results, based on the 2007 and 2010 Chinese inter-regional input–output tables, show that changes in most regions' final demand scale, final expenditure structure, and export scale have positive spatial spillover effects on other regions' CO₂ emissions growth; changes in most regions' consumption and export preference help reduce other regions' CO₂ emissions; changes in production technology and investment preferences may exert positive or negative effects on other region's CO₂ emissions growth through domestic supply chains. For some regions, the aggregate spillover effect from other regions may be larger than the intra-regional effect in determining regional emissions growth. All these facts can significantly help provide a better, deeper understanding of the driving forces behind the growth of regional CO₂ emissions and can thus enrich the policy implications concerning a narrow definition of “carbon leakage” through domestic inter-regional “trade” as well as a relevant political consensus about responsibility sharing between developed and developing regions inside China.     

Good subsidies or bad subsidies? Evidence from low-carbon transition in China's metallurgical industry

Since the metallurgical industry has become the main source of China's carbon dioxide emissions and energy consumption in recent years, low-carbon transition in that industry is of great significance for achieving China's carbon reduction targets. It is generally believed that phasing out fossil fuel subsidies is an effective way to reduce energy-related CO₂ emissions since it can increase the energy prices and lower its consumption. This paper aims to investigate whether the energy subsidy removal can promote the low-carbon transition of China's metallurgical industry. Taking inter-fuel and inter-factor substitution effects as the link, we calculate the CO₂ mitigation potential on the assumption that the subsidies for each category of fossil energy were eliminated. We find that the metallurgical industry has a sluggish reaction to the changes in energy price. Supposing eliminating the energy subsidies in the period of 2003–2015, the amount of reduced CO₂ would be 487.286 million tons, accounting for a slight proportion of the total emissions in the industry. But it is meaningful for the global CO₂ mitigation since it approximates the whole CO₂ emissions in Norway during the same period. These findings can provide some new insights for the energy subsidy issue and suggest that the additional measures are required to promote the low-carbon transition in China's metallurgical industry rather than just relying on the removal of fossil fuel subsidies.     

Regional allocation of CO2 emissions allowance over provinces in China by 2020

The mitigation efforts of China are increasingly important for meeting global climate target since the rapid economic growth of China has led to an increasing share in the world's total CO₂ emissions. This paper sets out to explore the approach for realizing China's national mitigation targets submitted to the UNFCCC as part of the Copenhagen Accord; that is, to reduce the intensity of CO₂ emissions per unit of GDP by 40–45% by 2020, as well as reducing the energy intensity and increasing the share of non-fossil fuel consumption, through regional allocation of emission allowance over China's provinces. Since the realization of China's mitigation target essentially represents a total amount emission allowance allocation problem, an improved zero sum gains data envelopment analysis optimization model, which could deal with the constant total amount resources allocation, is proposed in this study. By utilizing this model and based on several scenarios of China's economic growth, CO₂ emissions, and energy consumption, a new efficient emission allowance allocation scheme on provincial level for China by 2020 is proposed. The allocation results indicate that different provinces have to shoulder different mitigation burdens in terms of emission intensity reduction, energy intensity reduction, and share of non-fossil fuels increase.     

Can expanding natural gas infrastructure mitigate CO2 emissions? Analysis of heterogeneous and mediation effects for China

To verify whether the expansion of natural gas infrastructure can effectively mitigate carbon dioxide (CO₂) emissions in China, this study first investigates the impact of natural gas infrastructure on China's CO₂ emissions by employing a balanced panel dataset for 30 Chinese provinces covering 2004–2017. Fully considering the potential heterogeneity and asymmetry, the two-step panel quantile regression approach is utilized. Also, to test the mediation impact mechanism between natural gas infrastructure and CO₂ emissions, this study then analyzes the three major mediation effects of natural gas infrastructure on China's CO₂ emissions (i.e., scale effect, technique effect, and structure effect). The empirical results indicate that expansion of the natural gas infrastructure can effectively mitigate China's CO₂ emissions; however, this impact is significantly heterogeneous and asymmetric across quantiles. Furthermore, through analyzing the mediation impact mechanism, the natural gas infrastructure can indirectly affect CO₂ emissions in China through the scale effect (i.e., gas population and economic effects) and structure effect (i.e., energy structure effect). Conversely, the technique effect (i.e., energy intensity effect) brought by natural gas infrastructure on CO₂ emissions in China has not been significant so far. Finally, policy implications are highlighted for the Chinese government with respect to reducing CO₂ emissions and promoting growth in the natural gas infrastructure.     

Regional difference and drivers in China's carbon emissions embodied in internal trade

To understand the impact of China's internal trade on China's carbon emissions, this article used the multi-regional input-output model to compare embodied carbon emissions based on production principle and consumption principle in the eight major economic regions of China. Besides, the SDA method was used to reveal the drivers of changes in CO₂ emissions. The study uses data from the 2007 and 2012 multi-regional input-output tables. The result shows that domestic demand emissions are the primary source of production-based emissions in China, but the proportion of external demand emissions is increasing rapidly. According to the structural decomposition of the embodied carbon emissions, it can be seen that the carbon emissions caused by the trade in intermediate products have always been a major component of external demand emissions. Further research indicates that the rapid growth in carbon emissions from the production and consumption side of the region is mainly attributed to the expansion of the final demand scale and changes in input structure of the production department. The most critical factor that restrains the increase in carbon emissions on both principles in all regions is the reduction of emission intensity in the production sector. The conclusion of this paper has important implications for how to coordinate inter-provincial trade and regionally balanced development under open economic conditions.     

Would environmental regulation improve the greenhouse gas benefits of natural gas use? A Chinese case study

Along with rapidly increasing natural gas consumption and carbon dioxide (CO₂) levels and the gradually strengthening environmental regulation, further investigation of the emission-natural gas-environmental regulation nexus in China is particularly useful for mitigating the country's CO₂ emissions. To empirically investigate whether environmental regulation improves the greenhouse gas benefits of natural gas use in China, this study investigates the causal relationships among CO₂ emissions, natural gas consumption, and environmental regulation in China, based on panel data of China's 30 provinces covering 2005–2015. Fully considering the potential cross-sectional dependence, the system general method of moments (SYS-GMM) estimation method is utilized. The empirical results reveal that: (1) Environmental Kuznets curve (EKC) hypothesis for CO₂ emissions is valid in China; (2) environmental regulation will not only directly affect CO₂ emissions, but also indirectly affect CO₂ emissions by influencing the energy consumption structure; (3) environmental regulation cannot significantly improve the greenhouse gas benefits of natural gas use, as environmental regulation in China can indirectly reduce CO₂ emissions by decreasing coal consumption rather than increasing natural gas consumption; and (4) the causality analysis for three regions confirms the existence of significant regional differences. These findings offer several targeted policies for reducing CO₂ emissions and promoting growth in the natural gas industry in China.     

China's transportation energy consumption and CO2 emissions from a global perspective

Rapidly growing energy demand from China's transportation sector in the last two decades have raised concerns over national energy security, local air pollution, and carbon dioxide (CO₂) emissions, and there is broad consensus that China's transportation sector will continue to grow in the coming decades. This paper explores the future development of China's transportation sector in terms of service demands, final energy consumption, and CO₂ emissions, and their interactions with global climate policy. This study develops a detailed China transportation energy model that is nested in an integrated assessment model—Global Change Assessment Model (GCAM)—to evaluate the long-term energy consumption and CO₂ emissions of China's transportation sector from a global perspective. The analysis suggests that, without major policy intervention, future transportation energy consumption and CO₂ emissions will continue to rapidly increase and the transportation sector will remain heavily reliant on fossil fuels. Although carbon price policies may significantly reduce the sector's energy consumption and CO₂ emissions, the associated changes in service demands and modal split will be modest, particularly in the passenger transport sector. The analysis also suggests that it is more difficult to decarbonize the transportation sector than other sectors of the economy, primarily owing to its heavy reliance on petroleum products.     

Inter-factor/inter-fuel substitution,carbon intensity,and energy-related CO2 reduction: Empirical evidence from China

Carbon dioxide (CO₂) reduction, which is the central issue in addressing global warming, depends on the extent that clean energy can substitute for CO₂ emitting coal and non-energy factors can substitute for energy factor. The purposes of this paper are to empirically investigate inter-factor/inter-fuel substitution in China and to evaluate the determinants of China's energy-related carbon intensity as well as mitigation effects of carbon tax. Considering China's rapid increase in energy consumption and the slow adjustment in substitution, the two-stage estimation method and the dynamic error correction mechanism are employed in this study. The empirical results suggest substitutability among different types of energy sources as well as substitutability among energy, labor, and capital. The magnitude of cross-price elasticities indicates that the substitutions are inelastic, which limits the scope of the Chinese government to implement substitution strategy aiming at energy conservation and environmental management. China's carbon intensity declined during 1985–2012, most of which can be attributed to labor substitution and energy price increase. However, carbon-intensive technology being embodied in China's capital investment (energy consuming equipment) has contributed to the increase in carbon intensity. A carbon tax of RMB 50/tonne could reduce 332.9 million tonnes CO₂ emissions on the basis of 2012. In addition, if ignoring the feedback between inter-factor/inter-fuel substitutions, CO₂ mitigation potential would be underestimated.     

Evaluating carbon dioxide emissions in international trade of China

China is the world's largest emitter of carbon dioxide (CO₂). As exports account for about one-third of China's GDP, the CO₂ emissions are related to not only China's own consumption but also external demand. Using the input–output analysis (IOA), we analyze the embodied CO₂ emissions of China's import and export. Our results show that about 3357 million tons CO₂ emissions were embodied in the exports and the emissions avoided by imports (EAI) were 2333 million tons in 2005. The average contribution to embodied emission factors by electricity generation was over 35%. And that by cement production was about 20%. It implies that the production-based emissions of China are more than the consumption-based emissions, which is evidence that carbon leakage occurs under the current climate policies and international trade rules. In addition to the call for a new global framework to allocate emission responsibilities, China should make great efforts to improve its energy efficiency, carry out electricity pricing reforms and increase renewable energy. In particular, to use advanced technology in cement production will be helpful to China's CO₂ abatement.     

China's energy and emissions outlook to 2050: Perspectives from bottom-up energy end-use model

Although China became the world's largest CO₂ emitter in 2007, the country has also taken serious actions to reduce its energy and carbon intensity. This study uses the bottom-up LBNL China End-Use Energy Model to assess the role of energy efficiency policies in transitioning China to a lower emission trajectory and meeting its 2020 intensity reduction goals. Two scenarios – Continued Improvement and Accelerated Improvement – were developed to assess the impact of actions already taken by the Chinese government as well as planned and potential actions, and to evaluate the potential for China to reduce energy demand and emissions. This scenario analysis presents an important modeling approach based in the diffusion of end-use technologies and physical drivers of energy demand and thereby help illuminate China's complex and dynamic drivers of energy consumption and implications of energy efficiency policies. The findings suggest that China's CO₂ emissions will not likely continue growing throughout this century because of saturation effects in appliances, residential and commercial floor area, roadways, fertilizer use; and population peak around 2030 with slowing urban population growth. The scenarios also underscore the significant role that policy-driven efficiency improvements will play in meeting 2020 carbon mitigation goals along with a decarbonized power supply.     

CO2 emissions,energy consumption and economic growth in China: A panel data analysis

This paper examines the causal relationships between carbon dioxide emissions, energy consumption and real economic output using panel cointegration and panel vector error correction modeling techniques based on the panel data for 28 provinces in China over the period 1995–2007. Our empirical results show that CO₂ emissions, energy consumption and economic growth have appeared to be cointegrated. Moreover, there exists bidirectional causality between CO₂ emissions and energy consumption, and also between energy consumption and economic growth. It has also been found that energy consumption and economic growth are the long-run causes for CO₂ emissions and CO₂ emissions and economic growth are the long-run causes for energy consumption. The results indicate that China's CO₂ emissions will not decrease in a long period of time and reducing CO₂ emissions may handicap China's economic growth to some degree. Some policy implications of the empirical results have finally been proposed.     

Urban energy use and carbon emissions from cities in China and policy implications

Urban areas contain 40% of the population and contribute 75% of the Chinese national economy. Thus, a better understanding of urban energy uses is necessary for Chinese decision-makers at various levels to address energy security, climate change mitigation, and local pollution abatement. Therefore, this paper addresses three key questions: What is the urban contribution to China's energy usage and CO₂ emissions? What is the contribution of large cities, and what alternate energy–economy pathways are they following? How have energy uses and CO₂ emissions transformed in the last two decades in key Chinese cities? This three-tier analysis illustrates the changes in urban energy uses and CO₂ emissions in China. The results show that the urban contributions make up 84% of China's commercial energy usage. The 35 largest cities in China, which contain 18% of the population, contribute 40% of China's energy uses and CO₂ emissions. In four provincial cities, the per capita energy usage and CO₂ emissions have increased several-fold. Rapid progress was made in reducing the carbon intensity of economic activities in cities throughout the 1990s, but alarmingly, such progress has either slowed down or been reversed in the last few years. These results have important policy implications.     

Quantifying regional economic impacts of CO2 intensity targets in China

To address rising energy use and CO₂ emissions, China's leadership has enacted energy and CO₂ intensity targets under the Twelfth Five-Year Plan (2011–2015), which are defined at both the national and provincial levels. We develop a computable general equilibrium (CGE) model with global coverage that disaggregates China's 30 provinces and includes energy system detail, and apply it to assess the impact of the current binding provincial CO₂ emissions intensity targets. We compare the impact of the provincial targets approach to a single target for China that achieves the same reduction in CO₂ emissions intensity at the national level. The national target assumes trading of emissions allowances across provinces, resulting in the least-cost reductions nationwide. We find that the national target results in about 20% lower welfare loss in China relative to the provincial targets approach. Given that the regional distribution of impacts has been an important consideration in the target-setting process, we focus on the changes in provincial-level CO₂ emissions intensity, CO₂ emissions, energy consumption, and economic welfare. We observe significant heterogeneity across provinces in terms of the energy system response as well as the magnitude of welfare impacts. We further model the current policy of fixed end-use electricity prices in China and find that national welfare losses increase. Assumptions about capital mobility have a substantial impact on national welfare loss, while changing assumptions about the future availability of domestic natural gas resources does not have a large effect.     

Evaluation of energy saving potential in China's cement industry using the Asian-Pacific Integrated Model and the technology promotion policy analysis

Much of China's cement industry still uses outdated kilns and other inefficient technologies, which are obstacles to improving energy efficiency. Huge improvements in energy consumption intensity can be made by improving this technology. To evaluate the potential for energy-saving and CO₂ emissions reduction in China's cement industry between 2010 and 2020, a model was developed based on the Asian-Pacific Integrated Model (AIM). Three scenarios (S1, S2 and S3) were developed to describe future technology policy measures in relation to the development of the cement industry. Results show that scenario S3 would realize the potential for CO₂ emissions mitigation of 361.0 million tons, accounting for 25.24% of the predicted emissions, with an additional energy saving potential of 39.0 million tons of coal equivalent by 2020. Technology promotion and industrial structure adjustment are the main measures that can lead to energy savings. Structural adjustment is the most important approach to reduce the CO₂ emissions from the cement industry; the resulting potential for CO₂ emissions reduction will be increasingly large, even exceeding 50% after 2016.