Urban Carbon Reduction Costs and Potentials in China: A Nonparametric Approach

Abstract

AbstractThis chapter employs the non-radial slacks-based measure data envelopment analysis (SBM-DEA) method to analyse city-level carbon reduction costs and potentials in China. A panel dataset including 286 prefectural-and-above cities for the 2002–2013 period has been complied and explored. The results indicate that urban carbon reduction potential level showed a slightly decreasing trend. Nationally, the average and median values of urban carbon reduction costs were about 1,190 Yuan/tonne and 1,050 Yuan/tonne, respectively. The estimates reveal substantially geographical heterogeneities in carbon reduction costs and potentials across cities. Averagely, the eastern cities had smaller carbon reduction potential but higher carbon reduction cost, while the northeastern cities had larger reduction potential but smaller reduction cost. The annual average carbon reduction costs for the eastern, central, and western cities fluctuated during the studied period. However, the northeatern cities experienced a considerable increase. The empirical results confirm that there was a U-shaped connection between urban carbon reduction cost and carbon emissions intensity. Overall, the empirical results argue that carbon trading market is likely to be more efficient and flexible than command-and-control reduction regulations.