How does firm heterogeneity information impact the estimation of embodied carbon emissions in Chinese exports?

Yu Liu (), Bo Meng, Hubacek Klaus, Xue Jinjun, Feng Kuishuang and Yuning Gao

No 592, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Using an augmented Chinese input–output table in which information about firm ownership and type of traded goods are explicitly reported, we show that ignoring firm heterogeneity causes embodied CO2 emissions in Chinese exports to be overestimated by 20% at the national level, with huge differences at the sector level, for 2007. This is because different types of firm that are allocated to the same sector of the conventional Chinese input–output table vary greatly in terms of market share, production technology and carbon intensity. This overestimation of export-related carbon emissions would be even higher if it were not for the fact that 80% of CO2 emissions embodied in exports of foreign-owned firms are, in fact, emitted by Chinese-owned firms upstream of the supply chain. The main reason is that the largest CO2 emitter, the electricity sector located upstream in Chinese domestic supply chains, is strongly dominated by Chinese-owned firms with very high carbon intensity.

Keywords: Environmental problems; Global warming; Input-output tables; Embodied CO2 emissions; Carbon intensity; Supply chains; Ownership; Processing trade (search for similar items in EconPapers)
JEL-codes: C67 E01 F18 F64 H23 (search for similar items in EconPapers)
Date: 2016-03-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-tra
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 592. 2016-03-01

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