Structural decomposition and Regional Sensitivity Analysis of industrial consumption embedded emissions from Chinese households

Abstract

Households play a vital role in producing industrial emissions through final-consumption. As a result, related literature focuses mainly on the drivers of household demand embedded industrial production (DEIP) emissions. Recent evidence on industrial emissions, however, shows that targeting industrial carbon consumers and their final demand, particularly from households, is much more effective. Unfortunately, there isn't much literature on household demand embedded industrial consumption (DEIC) emissions. The aim of this study is to develop a model that can help analyze the impact of key drivers on household DEIC emissions. The model is applied to Chinese urban and rural household DEIC emissions. Additionally, the study also employees Regional Sensitivity Analysis to rank and map the most influential factors of Chinese rural and urban DEIC emissions. Results showed that for both rural and urban households, income/capita with an average impact of 35 Mt and 111 Mt was the main driver of DEIC emissions growth. Income/capita was also the most sensitive factor for rural and urban DEIC emissions. The consumer industry's Leontief effect (technology) had the second largest positive effect on both rural and urban household DEIC emissions. However, for rural and urban households, the second most sensitive factors were different. Emission intensity for rural households and consumption tendency for urban households had the greatest negative effects on respective DEIC emissions. Finally, the article discusses results, highlighting policy implications for reducing rural and urban household DEIC emissions.