Embodied carbon emissions transfers via inter-regional trade: evidence from value-added extended decomposition model in China

Abstract

The allocation of carbon emission reduction responsibility is severe issue in China for these years. In case to find a fairer and more effective way to divided the responsibility to each region of China, this paper examines embodied carbon emissions (ECEs) transfers in China's inter-regional trade by applying value-added extended decomposition model. This study allows policymakers to trace CO2 emissions at regional levels and provides three key findings. Firstly, using novel data on the physical consumption of energy by region, we observe a strong and robust negative association between the regional direct CO2 emission coefficient and the regional economic development level. Secondly, employing the latest inter-regional input-output table of China to calculate ECEs and uncover transfer characteristics via inter-regional trade, results show that central region, eastern region and northern region are the three highest ECEs regions. Thirdly, ECEs in value-added trade are generally transferred from inland China to coastal areas of China. Northeast region, north coastal region, central region and northwest region are net ECEs outflow regions, the rest regions are net ECEs inflow regions.