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Who shapes China's carbon intensity and how? A demand-side decomposition analysis

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  • Zhou, Xiaoyong
  • Zhou, Dequn
  • Wang, Qunwei
  • Su, Bin

Abstract

As national efforts to decouple carbon emissions from economic growth intensify, policymakers need more specific, sub-national information about the sources and reduction potentials of carbon intensity. This study presents a demand-side decomposition of China's carbon intensity to its regions, final demand types, and economic sectors, based on a predefined “aggregate embodied intensity (AEI)” indicator, i.e. the ratio of embodied emissions to embodied value added. We find that China's carbon intensity has been largely shaped by developed provinces, capital investment demand, and the construction sector. However, less-developed provinces, consumption demand, and the services sector have played increasingly important roles. Wealthy provinces generally experienced much lower AEIs and higher AEI reductions compared to poor provinces from 2007 to 2012, mainly owing to provincial differences in final demand structure and sectoral structure. Coastal region's emission reduction efforts at both production and demand sides were the main contributor to China's decrease in carbon intensity during the period, while interior region's structural degradation in demand partially offset the decrease. Our results suggest that allocating national carbon intensity targets based on AEI, and adjusting the final demand structure of central-western provinces, would greatly benefit for China to achieve its ambitious carbon intensity target by 2030.

Suggested Citation

  • Zhou, Xiaoyong & Zhou, Dequn & Wang, Qunwei & Su, Bin, 2020. "Who shapes China's carbon intensity and how? A demand-side decomposition analysis," Energy Economics, Elsevier, vol. 85(C).
  • Handle: RePEc:eee:eneeco:v:85:y:2020:i:c:s0140988319303950
    DOI: 10.1016/j.eneco.2019.104600
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    More about this item

    Keywords

    National carbon intensity; Aggregate embodied intensity; Demand-side analysis; Multi-regional input-output analysis; Structural decomposition analysis;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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