Industrial structure, technical progress and carbon intensity in China's provinces

Abstract

This paper uses dynamic spatial panel models to analyze the effects of industrial structure and technical progress on carbon intensity in order to explore those factors that may lead to a reduction in carbon intensity in China. The results show that there is both significant positive spatial autocorrelation and spatial heterogeneity between provinces in carbon intensity. Although upgrading and optimization of industrial structure are conducive to reducing carbon intensity, in China it is technical progress that plays the most important role. Efficiency change is a leading factor in the reduction of carbon intensity by technical progress, but the effect of technical change is not significant because of the carbon emissions rebound effect. Although technical change itself cannot directly reduce carbon intensity, it can indirectly do so by promoting the upgrading and optimization of industrial structure. Both structure of urbanization and coal-dominated energy consumption increase carbon intensity but the relationship between foreign direct investment and carbon intensity is not significant. Based on these empirical findings, we put forward specific suggestions for the Chinese government in their quest to reduce carbon intensity.