China's Growing CO2 EmissionsA Race between Increasing Consumption and Efficiency Gains

Abstract

China's rapidly growing economy and energy consumption are creating serious environmental problems on both local and global scales. Understanding the key drivers behind China's growing energy consumption and the associated CO2 emissions is critical for the development of global climate policies and provides insight into how other emerging economies may develop a low emissions future. Using recently released Chinese economic input-output data and structural decomposition analysis we analyze how changes in China's technology, economic structure, urbanization, and lifestyles affect CO2 emissions. We find that infrastructure construction and urban household consumption, both in turn driven by urbanization and lifestyle changes, have outpaced efficiency improvements in the growth of CO2 emissions. Net trade had a small effect on total emissions due to equal, but significant, growth in emissions from the production of exports and emissions avoided by imports. Technology and efficiency improvements have only partially offset consumption growth, but there remains considerable untapped potential to reduce emissions by improving both production and consumption systems. As China continues to rapidly develop there is an opportunity to further implement and extend policies, such as the Circular Economy, that will help China avoid the high emissions path taken by today's developed countries.