China’s provincial CO₂ emissions embodied in international and interprovincial trade

Abstract

Trades create a mechanism of embodied CO₂ emissions transfer among regions, causing distortion on the total emissions. As the world’s second largest economy, China has a large scale of trade, which results in the serious problem of embodied CO₂ emissions transfer. This paper analyzes the characteristics of China’s CO₂ emissions embodied in international and interprovincial trade from the provincial perspective. The multi-regional Input–Output Model is used to clarify provincial CO₂ emissions from geographical and sectoral dimensions, including 30 provinces and 28 sectors. Two calculating principles (production accounting principle and consumption accounting principle, Munksgaard and Pedersen, 2001) are applied. The results show that for international trade, the eastern area accounts for a large proportion in China’s embodied CO₂ emissions. The sectors as net exporters and importers of embodied CO₂ emissions belong to labor-intensive and energy-intensive industries, respectively. For interprovincial trade, the net transfer of embodied CO₂ emissions is from the eastern area to the central area, and energy-intensive industries are the main contributors. With the largest amount of direct CO₂ emissions, the eastern area plays an important role in CO₂ emissions reduction. The central and western areas need supportive policies to avoid the transfer of industries with high emissions.

Introduction

With strong economic growth, China’s CO₂ emissions grow quickly. China overtook the United States and became the world’s largest emitter of CO₂ in 2007 (IEA, 2009). Facing increasing international pressure to take collaborative action on curbing CO₂ emissions, China pledged to cut CO₂ emissions per unit of GDP by 40–45% from the level of 2005 by 2020. And China’s “12th Five-Year Plan” for national economic and social development set targets to cut CO₂ emissions intensity by 17% over the next five years (2011–2015). The CO₂ emissions reduction target will be allocated among China’s provinces according to each province’s CO₂ emissions level in the base year of 2005, which are affected by trade. It is of great significance to calculate the CO₂ emissions embodied in trade for assigning the task of CO₂ emissions reduction to different provinces.

Through international trade, significant environmental impacts can be shifted from one country to another (Li and Hewitt, 2008). More and more researches (Peters et al., 2007, Guan et al., 2008, Weber et al., 2008, Feng et al., 2009, Guan et al., 2009, Zhang, 2009a, Zhang et al., 2009) investigating the driving forces of CO₂ emissions in China have emerged recently, and it is pointed out that China’s CO₂ emissions are largely driven by the rapid growth of export-orientated production. The literatures on China’s CO₂ emissions embodied in international trade can be roughly divided into two types. The first type focuses on the changing trend of embodied CO₂ emissions in a period (Wang and Watson, 2007, Pan et al., 2008, Qi et al., 2008, Weber et al., 2008, Wei et al., 2009, Wei et al., 2011, Zhang, 2009b, Lin and Sun, 2010, Yan and Yang, 2010, Liu and Ma, 2011). In recent years, China’s CO₂ emissions embodied in international trade have risen quickly with the increasing level of economic openness, and China has been a net exporter of embodied CO₂ emissions for most years. The problem of “carbon leakage” is becoming more and more serious. International trade is a main reason for the rise of China’s CO₂ emissions, due to trade surplus and relatively high level of CO₂ emissions intensity. The second type focuses on the CO₂ emissions embodied in the international trade with certain countries (Shui and Harriss, 2006, Li and Hewitt, 2008, Xu et al., 2009, Dong et al., 2010, Guo et al., 2010, Liu et al., 2010, Zhou, 2010). China is a net exporter of CO₂ emissions embodied in international trade with the majority of foreign nations, and China-US trade surplus is the major cause of embodied CO₂ emissions transfer.

Previous studies mainly analyze CO₂ emissions embodied in international trade from the national perspective, not reflecting regional diversity within the country. International trade has different impacts on CO₂ emissions in different regions. For example, there were obvious differences in regional CO₂ emissions during the financial crisis of 2008–2009, when China’s exports decreased rapidly. Eastern and central areas experienced a decrease of annual growth rates of CO₂ emission. The growth rates of CO₂ emissions for eastern and central areas were 9.15% and 9.07%, respectively, in 2007. After 2007 the growth rates fell down quickly, which were 3.96%, 5.86% in 2008 and 3.95%, 4.30% in 2009. However, the decrease of exports did not have an obvious influence on western area’s CO₂ emissions, the annual growth rates of which were 7.17%, 8.85% and 8.67% in 2007, 2008 and 2009. (The data is from our earlier paper, Meng et al., 2011.) So it has great significance to analyze the CO₂ emissions embodied in international trade from a provincial perspective.

In 1997, the provinces with higher CO₂ emissions were mainly concentrated in areas around North China, while the high emission areas spread from the eastern coastal area to the central area such as Neimeng, Henan, Hubei and Hunan, in 2007 (Meng et al., 2011). With the government paying more attention to environmental protection, more and more enterprises with high emissions are moving from the coastal area to the central and western areas, which do not have strict environmental protection laws and regulations. Coastal provinces shift CO₂ emissions to central and western provinces, through moving in high emission goods from central and western provinces. Interprovincial trade has an obvious impact on provincial CO₂ emissions, especially considering the fact that the scale of interprovincial trade is much larger than that of international trade.

Input–output analysis (Leontief, 1941), widely used in the calculation of embodied CO₂ emissions can be mainly divided into two types (Lin and Sun, 2010): single-regional IO model (Lenzen, 1998, Hertwich et al., 2002, Sánchez-Chóliz and Duarte, 2004, Kander and Lindmark, 2006, Peters and Hertwich, 2006a, Mäenpää and Siikavirta, 2007, Pan et al., 2008, Yan and Yang, 2010, Wei et al., 2011) and multi-regional IO model (Ahmad and Wyckoff, 2003, Lenzen et al., 2004, Sánchez-Chóliz and Duarte, 2004, Munksgaard et al., 2005, Peters and Hertwich, 2006b, Ackerman et al., 2007, Mäenpää and Siikavirta, 2007, Peters, 2007, Weber and Matthews, 2007, Wilting and Vringer, 2007, Peters, 2008, Hertwich and Peters, 2009, Davis and Caldeira, 2010, Wiedmann et al., 2010, Peters et al., 2011). Multi-regional IO model not only reflects the relationship between different sectors, but also the economic links between regions. Adopting the multi-regional IO model, we analyze CO₂ emissions embodied in international trade from a provincial perspective and calculate the CO₂ emissions embodied in interprovincial trade to investigate the transfer of embodied CO₂ emissions among provinces in 2002, and then we estimate the provincial CO₂ emissions levels in the base year of China’s CO₂ emissions reduction target under both production and consumption principles.. From analyses of both international and interprovincial trade, we can panoramically describe and evaluate the characteristics of China’s provincial emissions.

The rest of the paper is organized as follows. Section 2 introduces the calculation method and data preparation. Section 3 analyzes the calculation results of embodied CO₂ emissions. Section 4 presents a discussion on CO₂ emissions under different principles, and then estimates the provincial emissions in 2005. A description of uncertainties is given in Section 5, followed by conclusions in Section 6.