Marginal Carbon Dioxide Emission Reduction Cost and Influencing Factors in Chinese Industry Based on Bayes Bootstrap

Abstract

Accurate measurement of the shadow price of carbon dioxide (CO2) is fundamental to the scientific assessment of the carbon emission reduction cost and the formulation and execution of China’s carbon emission mitigation policies. Underpinned by the directional distance function, this research uses a parametric linear programming method and a Bayes bootstrap estimation method to estimate the marginal CO2 emission reduction cost of the industrial sector in China and to quantify the related influencing factors. The results revealed that the marginal reduction cost of industrial CO2 is CNY 4565/ton. The marginal reduction cost of CO2 varies by industry, with the textile industry being the highest and the petroleum, coking and nuclear fuel processing industries the lowest. Meanwhile, an increasing number of industries are shifting to cleaner production. Furthermore, the marginal reduction cost of industrial CO2 has an “inverted U-shaped” relation with carbon intensity. Carbon emission reduction can be accomplished effectively if the carbon intensity is kept below the threshold value of 0.41 tons/CNY 10,000.