Why are there large regional differences in CO2 emissions? Evidence from China's manufacturing industry

Abstract

Currently, China is the largest emitter of carbon dioxide in the world. Moreover, the manufacturing industry is the largest contributor to China's CO2 emissions. Therefore, investigating the main driving forces of CO2 emissions in the manufacturing industry has great practical significance. Using panel data from 2000 to 2014, this paper examines the driving forces of the industry's CO2 emissions at the regional level. The results show that economic growth dictates the industry's CO2 emissions, and its impact varies across regions. The influence of industrialization on CO2 emission in the central region is stronger than in the eastern and western regions due to differences in industrial structure and the building industry. The impact of urbanization declines continuously from the western region to the central and eastern regions because of differences in human capital accumulation and private car ownership. Energy structure also produces a different effect in the three regions on account of differences in coal consumption. Furthermore, the role of energy efficiency in reducing CO2 emissions in the three regions is markedly different owing to big differences in R&D funding and R&D personnel investments. Considering the significant regional differences, we propose policy recommendations to mitigate CO2 emissions in the manufacturing industry.