Changes in China’s production-source CO₂ emissions: insights from structural decomposition analysis and linkage analysis

ABSTRACT

This paper presents an input–output based methodology – structural decomposition analysis (SDA) plus linkage analysis, for identifying the key factors and sectors that affected production-source CO₂ emissions in China. The proposed methodology extends the SDA to account for the import substitution effect within an open economy such as China and incorporates the emission linkage by which the effect of the input mix on CO₂ emissions can be understood in depth. Empirical results indicate that, between 2005 and 2010, improving emission intensity and input intensity had helped to reduce CO₂ emissions; meanwhile, capital investment explained the majority of the increases in CO₂ emissions brought about by final demand, and import substitution was also observed to increase CO₂ emissions. Moreover, nine key emission sectors have been identified, and in this regard, domestic inputs became more CO₂-intensive in 2010 than it was in 2005.

KEYWORDS:

• CO₂ emissions
• structural decomposition analysis
• linkage analysis
• China

Acknowledgments

We thank this journal's referees for encouraging us to make many points crystal clear. We thank Professor Manfred Lenzen in particular for his helpful comments on prior drafts of this paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹${\mathbf{\text{B}}}^{\mathrm{d}}$ is the $n\times n$ matrix of domestic output coefficients and usually defined as ${\mathbf{\text{B}}}^{\mathrm{d}}=\left\{B_{ij}^{\mathrm{d}}\right\}=\left\{x_{ij}^{\mathrm{d}}/x_i\right\}$, where $x_{ij}^{\mathrm{d}}$ stands for the domestically supplied inputs.

²Following concerns by Oosterhaven (1988; 1996) about the plausibility of the Ghosh inverse in measuring supply-side issues, Dietzenbacher (1997) noted that if it is reinterpreted as a price model, albeit in Leontief fashion, it remained valid. The catch, however, is that in this interpretation, sectoral output values change as a function of price changes introduced as changes in value added. That is, multipliers of the Leontief price model, as he called this reinterpretation of the Ghosh model, report how external price changes (and not quantity changes as in the conventional Leontief model) diffuse through the value of production in a Leontief system.

³When considering the impact of CO₂ emissions, the standard Ghosh model (Ghosh, 1958) can be generalised as $\overrightarrow{\mathit{\text{C}}}={\mathbf{\text{xc}}}^{\mathrm{\prime }}=\mathbf{\text{v}}(\mathbf{\text{I}}-{\mathbf{\text{B}}}^{\mathrm{d}}{)}^{-1}{\mathbf{\text{c}}}^{\mathrm{\prime }}=\mathbf{\text{v}}{\overrightarrow{\text{μ}}}^{\mathrm{c}}$, where v is the vector of value added by industry.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71573169] and Program for Changjiang Scholars and Innovative Research Team in SUFE [IRT13077].