Strategic Measures to Reduce China’s Carbon Emissions: Based on an Index Decomposition Analysis of Carbon Emissions in Eight Industries

Abstract

This article uses the refined Laspeyres index decomposition method to examine the overall trends and characteristics of carbon emissions in eight Chinese industries for the period 1994-2008. The results show that every one percentage point increase in economic scale will result in an average increase of 15 Mt (million tonnes) in carbon emissions. However, different industries vary greatly in terms of marginal carbon emissions caused by economic growth. The economic structure’s bias toward heavy industry fuels the increase of carbon emissions: every one percentage point rise in the share of manufacturing industry produces an average of 56 Mt carbon emissions. Technological progress helps reduce energy intensity and serves as a core driver in reducing carbon emissions, in that every one percentage point decrease in energy intensity will cause an average reduction of 33 Mt in carbon emissions. Our coal-dominated energy structure has resulted in a persistently high level of carbon emissions, suggesting that the reduction effect brought about by changes in energy structure is not significant. Nevertheless, lowering the density of overall carbon emissions is a positive signal, indicating that China is optimizing its energy structure. Only by promoting industrial restructuring, optimizing energy structure, encouraging energy-saving technologies and technological innovation, and reorienting industry can China achieve low-carbon development and control pollution.