Abstract
Global warming and the rapid growth of carbon emissions have attracted the attention of governments and academia throughout the world. In 2006, China surpassed the United States as the emitter of the greatest volume of carbon, the largest contribution of which is derived from China’s industrial sector. This study investigated the evolution of industrial carbon shadow prices (CSPs) in China at the provincial level to assess the opportunity costs in terms of value added foregone owing to decreasing carbon emissions. A dual formulation of the by-production data envelopment analysis (DEA) model was applied to estimate the industrial carbon abatement costs in China during 2003–2017. This study represents the first attempt to apply the dual by-production DEA model for this purpose. Empirical results showed that industrial CSP increased by 3.83% annually and that the average provincial CSP was approximately $562.43 USD/ton. A significant upturn in the CSP occurred after 2006. Furthermore, disparities of changes in industrial CSP over time were checked using the test of sigma convergence. Regional divergence was observed for the period 2011–2017. Policy implications were derived from the empirical results in terms of improvements regarding carbon abatement.
Highlights
China became the world’s largest emitter of carbon in 2006 and its greatest consumer of energy in 2011
The expectations associated with the establishment of the National Carbon Trading Market could explain the temporary decrease of the carbon shadow prices (CSPs) at this time
This study investigated the cost of carbon emission abatement in China’s industrial sector during 2003–2017
Summary
China became the world’s largest emitter of carbon in 2006 and its greatest consumer of energy in 2011. Data from the BP Statistical Review of World Energy [1] shows that carbon dioxide (CO2) emissions and energy consumption in China in 2018 reached 9428.70 million tons and 3273.50 million tons oil equivalent, accounting for 27.82% and 23.61% of the world’s total, respectively. The industrial sector is the major contributor to economic growth in China; it is responsible for producing the largest volume of carbon emissions and consuming the greatest quantity of energy [2]. According to estimates by Chen [3], the industrial sector contributed 83.1% of total carbon emissions and accounted for 67.9% of total energy consumption in China during 1980–2006.
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