China’s coal consumption in a globalizing world: Insights from Multi-Regional Input-Output and structural decomposition analysis

Abstract

The growth of global carbon emissions is largely driven by coal-burning in China. China has consumed approximately half of global coal; as such, limiting its coal demand is important for curbing carbon emissions in the country and around the world. Developing effective approaches to limit China’s coal demand requires comprehensively understanding the trajectory and drivers shaping its coal footprint in the globalized world. Past studies have investigated production-based coal consumption within China’s sovereign territory boundary, but have not addressed consumption-based coal consumption and the globalization background. To fill this research gap, this study conducted a multi-regional input-output analysis – structural decomposition analysis to analyze China’s coal footprint in a globalized world. The results show a continued rise in the influence of globalization on China’s coal consumption, despite the 1997 Asian financial crisis and 2008–09 global economic crisis lowering of global trade. The percentage of other countries’ coal demand on China’s production-based coal footprint increased from 20% in 1995 to nearly 30% in 2011, through a global transfer of virtual coal through trade. Virtual coal refers to the coal consumed to support production activities. Meanwhile, the impact of other countries’ coal supply on China’s consumption-based coal footprint increased from less than 2% in 1995 to more than 4% in 2011. However, the decomposition results showed that domestic demand was the leading contributor to Chinese production-based and consumption-based coal footprint. This was offset by the domestic coal intensity effect. To cut China’s coal, strategies to cap its total coal consumption should be considered in a globalized world. Improving energy intensity is an effective approach for the country; China should be leveraging the globalized world, rather than serving as the world’s factory through high coal consumption and exports.