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The impacts of economic structure on China’s carbon dioxide emissions: an analysis with reference to other East Asian economies

Tin Fai Kwok, Yuan Xu, Xiao Liu and Yee Leung

Climate Policy, 2018, vol. 18, issue 10, 1235-1245

Abstract: A change in economic structure influences the total energy consumption as well as CO2 emissions of a country, given the inherent difference in levels of energy intensity and energy fuel mix of different economic sectors. Its significance has been recognized in recent literature on China’s emission mitigation which could arguably raise China’s mitigation potential and thus the possibility of keeping the 2-degree trajectory on track. This article utilizes the past trend of economic structural change of five East Asian developed economies to project the energy consumption and CO2 emissions of China in the coming decades. A special delineation of the economic sector is made, putting private consumption together with the three typical economic production sectors, to resolve the mismatch between the statistical data of energy consumption and economic production, in that residential energy consumption is typically merged into the tertiary sector, although it does not directly correspond to gross domestic product (GDP) output. Results suggest that the level of CO2 emissions would be lower if China followed a development pathway emphasizing the development of the tertiary sector and continuously shrinking her secondary sector, making it possible for China to contribute more to global carbon mitigation. The impact from the rise of private consumption would be relatively insignificant compared to deindustrialization. In addition to continuous improvement in technology, economic structural change, which reduces carbon emission intensity, would be essential for China to be able to achieve the carbon emission level pledged in the Paris Agreement.Key policy insightsFor China, significant economic structural reform, particularly deindustrialization, is necessary to achieve the goal of ‘peak emission by 2030’. Any additional contribution from China to the global effort to maintain a 2-degree trajectory would be limited – from a ‘fair-contribution’ perspective based on share of population or GDP – because the implied mitigation targets would be almost impossible to achieve. If developing countries follow the pathway of developed economies, particularly in developing energy-intensive industries, energy consumption and CO2 emissions would significantly increase, reducing the possibility of keeping global temperature rise within the 2-degree Celsius benchmark.

Date: 2018
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