Using a three-tier structural decomposition analysis to assess industrial structure transformation and carbon emissions in China

An extensive and nuanced characterization of industrial structure transformation offers valuable insights into harmonizing economic and industrial policies for achieving emission reduction targets. This study introduced a novel three-tier structural decomposition analysis to systematically examine the impacts of industrial structure transformation on carbon emissions across national, provincial, and industrial levels. The first-tier decomposition indicated that industrial structure transformation contributed to an average of 36.08 % of total carbon emission reductions from 2007 to 2017 and surpassed technological progress as the main driver in carbon emission reductions post-2015. The second-tier and third-tier decomposition found that production-based and intra-region industrial structure transformations contributed to 70.76 % and 80.93 % of the aggregate structural decarbonization, respectively. Some of the highly-developed coastal provinces, such as Guangdong, Shanghai, Jiangsu, and Zhejiang, and the northeast developing provinces, such as Liaoning, Inner Mongolia, Heilongjiang, have made exceptional progress in the upgrading of industrial structures and accounted for more than 60 % of national emission reductions. The former group achieved the carbon reductions by transitioning low-skilled manufacturing to high-skilled manufacturing. However, inter-region industrial structure transformation had limited effects on carbon emission reductions, especially on the demand side. This suggested that the effectiveness of carbon reduction initiatives could be improved by addressing the existing barriers to trade and fostering industrial specialization among provinces.