Demand Effects on C02 Emission in China: A Structural Decomposition Analysis (SDA)

Abstract

China’s rapid industrialization has been accompanied by a fast growth in carbon emissions, which leaves it facing a serious challenge of carbon emissions reduction. Since the reform and open-up policy was launched, China’s carbon footprint has gradually increased in two stages; the first stage before 2001 featuring low growth, and the second stage since 2002 featuring high growth. According to Figure 13.1, China’s carbon footprint in 1980 was 1.5 billion tons, which then reached 3.36 billion in 1996. After that, it experienced extremely low growth due to the Asian financial crisis, which accounted for the 3.6 bn tons of carbon emission in 2001, only 0.25 billion higher than five years previously. There was an average annual growth rate of 4.3 per cent over the period of 21 years from 1980 to 2001. Since 2002, increase in carbon emissions started to speed up again, rising from 3.85 billion tons in 2002 to 7.7 billion in 2010, with an average annual growth rate of 9 per cent over eight years, which was two-times higher than the previous stage. During 2002–07, its average growth rate per annum recorded 12.2 per cent, surpassing the economic growth rate of 11.6 per cent for the same period (calculated in constant prices).