Analyzing Drivers of Regional Carbon Dioxide Emissions for China: A Structural Decomposition Analysis

Abstract

Summary: China faces the challenge of balancing unprecedented economic growth and environmental sustainability. Rather than a homogenous country that can be analyzed at the national level, China is a vast country with significant regional differences in physical geography, regional economy, demographics, industry structure, and household consumption patterns. There are pronounced differences between the much‐developed Eastern‐Coastal economic zone and the less developed Central and Western economic zones in China. Such variations lead to large regional discrepancies in carbon dioxide (CO 2 ) emissions. Using the 28 regional input‐output tables of China for 2002 and 2007 and structural decomposition analysis (SDA), we analyze how changes in population, technology, economic structure, urbanization, and household consumption patterns drive regional CO 2 emissions. The results show a significant gap between the three economic zones in terms of CO 2 emission intensity, as the Eastern‐Coastal zone possesses more advanced production technologies compared to the Central and Western zones. The most polluting sectors and largest companies are state‐owned enterprises and thus are potentially able to speed up knowledge transfer between companies and regions. The “greening” of the more developed areas is not only a result of superior technology, but also of externalizing production and pollution to the poorer regions in China. The results also show that urbanization and associated income and lifestyle changes were important driving forces for the growth of CO 2 emissions in most regions in China. Therefore, focusing on technology and efficiency alone is not sufficient to curb regional CO 2 emissions.