Based on time series decomposition of the Log-Mean Divisia Index (LMDI), this paper analyzes the change of industrial carbon emissions from 36 industrial sectors in China over the period 1998–2005. The changes of industrial CO2 emission are decomposed into carbon emissions coefficients of heat and electricity, energy intensity, industrial structural shift, industrial activity and final fuel shift. Our results clearly show that raw chemical materials and chemical products, nonmetal mineral products and smelting and pressing of ferrous metalsaccount for 59.31% of total increased industrial CO2 emissions. The overwhelming contributors to the change of China's industrial sectors’ carbon emissions in the period 1998–2005 were the industrial activity and energy intensity; the impact of emission coefficients of heat and electricity, fuel shift and structural shift was relatively small. Over the year 1998–2002, the energy intensity change in some energy-intensive sectors decreased industrial emissions, but increased emissions over the period 2002–2005. The impact of structural shift on emissions have varied considerably over the years without showing any clear trend, and the final fuel shift increased industrial emissions because of the increase of electricity share and higher emissions coefficient. Therefore, raw chemical materials and chemical products, nonmetal mineral products and smelting and pressing of ferrous metalsshould be among the top priorities for enhancing energy efficiency and driving their energy intensity close to the international advanced level. To some degree, we should reduce the products waste of these sectors, mitigate the growth of demand for their products through avoiding the excessive investment highly related to these sectors, increasing imports or decreasing the export in order to avoid expanding their share in total industrial value added. However, all these should integrate economic growth to harmonize industrial development and CO2 emission reduction.
Next to the United States, China is the greatest source of greenhouse gas emissions. As a signatory to the United Nations Framework Convention on Climate Change (UNFCCC), the Chinese government announced its approval of the Kyoto Protocol in August–September 2002. As a non-Annex party, China would not be bound in the initial commitment period (2008–2012) to any quantitative restrictions on its greenhouse gas emission. Consequently, it would obligate to monitor and report to the Conference of Parties on the status of greenhouse gas emission sources and sinks, and identify measures to dampen growth of net emissions in the future. Moreover, many scientists and environmental groups are attempting to identify targets for CO2 reductions, and influence international policies to address global climate change. In future agreements to reduce greenhouse gases, the Chinese commitment will be essential. Whether developing the report on greenhouse gas emission or formulating future commitment, it is necessary to know fully changes in China's CO2 emission. Moreover, it is necessary to know what factors in recent years are driving this change in order to have a more comprehensive understanding of the inter-relationships of economic development, technology improvement, energy consumption and CO2 emission. This will allow exploration of relevant strategies for reducing China's CO2 emission.
The industrial sector is extremely energy intensive and accounts for 40% of global energy use (Price et al., 2000). China's industrial final energy consumption alone accounts for about 15% of the total global industrial final energy use in 2002 (IEA, 2004a, IEA, 2004b). As shown in Fig. 1, China's industrial sectors account for more than 60% of final energy use, and more than 50% and 70% of final coal and electricity use over the period 1980–2005; however, they account for 36–53% of GDP (constant 1990 Yuan). Moreover, about 80% of electricity comes from thermal power generation in China.
Moreover, Fig. 2 shows that China's industrial final energy use and CO2 emissions increased rapidly over the year 1999–2005, and increased 52–60.09% from the year 2002 to 2005. Then which industrial sectors should be responsible for final energy use increase and why?
Industrial sectors are mainly responsible for CO2 emissions, and it is necessary to identify the change of China's industrial sectors’ CO2 emission, which is vitally important to the future energy strategies and reduction in CO2 emission.
Decomposition of CO2 emission has recently been an actively researched topic. Many studies have attempted to identify quantitatively the relative impact of different factors on the changes in CO2 emissions. Wu et al. (2005) argued that the speed of decrease in energy intensity and a slowdown in the growth of average labor productivity in the industrial sectors were the dominant contributors to the sudden changes of energy-related CO2 emission in the period 1996–1999. Wu et al. (2006) used the Log-Mean Divisia Index (LMDI) method to study CO2 emission from 1980 to 2002, and concluded that before 1996 economic scale, fuel mix and energy intensity on the energy-demand side mainly drove the changes in China's CO2 emission, and the structure and efficiency changes on the energy-supply side played only a minor role. Moreover, over the period 1996–2000, the acceleration of efficiency improvement in end-use and transformation sectors accounted for the decline in China's CO2 emission that were related to the total primary energy supply. Wang et al. (2005) concluded that the total theoretical decrease of CO2 emission was 2466 Mt during 1957–2000, of which about 95% of the total decrease could be attributed to energy intensity decline, and only 1.6% and 3.2%, respectively, can be attributed to fossil fuel mix and renewable energy penetration based on the LMDI decomposition method. Fan et al. (2007)show that industry structure partly offsets the decline impact over the period 1987–2002, and the change in final energy mix also partly offsets the decline impact of energy intensity on carbon intensity in carbon intensity over the period 1981–2002, which suggests that final energy use in material production sectors become carbon intensive, and that the development of material production sectors also become carbon intensive. Therefore, the further decline of carbon intensity should focus on the material production sectors’ final energy use, especially the industrial sectors.
However, the current decomposition analysis for China's CO2 emission focuses on the change of total CO2 emission and the analysis for a specific sector is relatively fewer.
Consequently, this paper analyzes the impact of different factors on the change of China's industrial CO2 emission over the period 1998–2005. The aim of the paper is to identify what factors are mainly driving the change of China's industrial CO2 emissions, and analyze what impact electricity consumption change can have on industrial carbon emissions.
The article is organized as follows. Section 2 describes the LMDI method and the data used. Section 3 presents the impacts of different factors on the changes of China's industrial CO2emission based on LMDI. Section 4 presents the conclusions. The last section offers some policy implications.
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