Sensitivity of sectoral CO2 emissions to demand and supply pattern changes in China

Abstract

To realize the emission reduction targets, it is essential to understand how technical and structural variations of an economy can lead to emission changes. This paper establishes the carbon dioxide (CO2) emissions elasticity indicators of technical and final demand coefficients from the demand perspective as well as allocation and primary input coefficients from the supply perspective, based on the input–output technique combined with sensitivity analysis. We apply these indicators to the Chinese economy for the year 2012. The results show that with every 1% decrease of self-supplied intermediate products in the Production and supply of electricity and heat and Smelting and pressing of ferrous metals (the two largest CO2 emitting sectors) could reduce CO2 emissions from the whole economy by 20.6 Mt and 11.3 Mt from the demand perspective, accounting for 0.22% and 0.12% of the national total CO2 emissions, respectively. It could also mitigate 22.2 Mt and 8.7 Mt from the supply perspective, accounting for 0.24% and 0.09% of the national total, respectively. In addition, 1% decrease of final demand coefficient of the Construction in Capital Formation could exert great indirect effects on many sectors, and lead to 37.4 Mt (0.40%) emission reduction from the whole economy. The absolute reduction due to the variation of primary input coefficients is relatively small. By analyzing these important intersectoral linkages of CO2 emissions within the economy from both demand and supply perspectives, the most important economic transactions between sectors as well as supply and demand patterns to reduce emissions are identified. These results can help guide the development of potential effective emission mitigation policies and the methods can also be applied to other countries and regions.