Abstract
This paper argues that, considering input–output linkages, microeconomic technology progress may lead to CO2 mitigation of the entire economy. We develop an environmentally extended heterogeneous agents and input-output (EE-HA-IO) model to evaluate CO2 emissions in different technology progress scenarios. We also measure the rate of technology progress in each sector in China between 2002 and 2014, with the aim of showing whether technological progress is compatible with the carbon mitigation of technological progress in each sector. In other words, whether there is an upside down phenomenon between technological progress and CO2 emission reduction. Our main conclusions include: (1) Most industries (except energy sectors) have a negative carbon footprint to technology progress. (2) Technology progress in energy related sectors and in the upstream sectors of industrial chain can be found to have a strong potential of emission increase effect. (3) From 2002 to 2007, the number of mispairing sectors gradually increased, while decreased significantly in 2008-2014. The reason behind it is that China's economic growth mode has changed.
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