Research on contribution decomposition by industry to china's carbon intensity reduction and carbon emission growth

The binding carbon intensity index and the pilot “cap-and-trade” emission trading scheme are two important approaches currently applied by China to mitigate its greenhouse gases emissions. It is of great significance to research the influence mechanism of related factors by industry on the dynamics of national carbon intensity and emission, not only for setting industry-specified intensity reduction target but also for setting industry coverage of the ETS. Two LMDI models were applied in this paper to decompose industry contributions to the changes of China's carbon intensity and carbon emission during the period of 1996-2010. Empirical results showed that: The decline of national carbon intensity was jointly determined by the changes of carbon intensities and the added value proportions of all industries, and the impact of industry carbon intensities was larger. The increase of national carbon emission was jointly determined by the changes of carbon intensities and the added value of all industries. The former had inhibitory effect whist the latter had decisive promoting effect. The five industries making the largest contribution to the changes of national carbon emission and carbon intensity included industries of electricity, nonmetal mineral, ferrous metal, transportation service, chemical materials, which were followed by the industries of agriculture, coal mining and processing, petroleum and natural gas extraction. Petroleum refining and coking industry and construction industry made small contribution to the decline of national carbon intensity, but made large contribution to the growth of national carbon emission. The contributions of service industries to national carbon emission growth showed a rising trend, especially those of transportation service industry, wholesaling, retailing and catering service industry.