Economic Analysis of CO2 Emission Trends in China

Abstract

Climate change is one of hot spots all around the world. China, the second biggest CO₂ emitter, is facing increasingly severe pressure to reduce CO₂ emission. The article first describes Kaya Identity and its policy implications. Second, it uses the modified Kaya Identity and makes decomposition without residues on CO₂ emission during the period 1971–2005. Taking into account the changes of macroeconomic background, it conducts a detailed analysis in terms of CO₂ emission trend from 4^th Five Year Plan through 10^th Five Year Plan. The decomposition results indicate that economic development and increase in population are major driving forces, and that improvement in energy efficiency contributes to the reduction of CO₂ emission, and that decarbonization in primary energy structure is also an important strategic choice. Finally, the article stresses that in CO₂ order to realize the binding target of 20% reduction in GDP energy intensity during the 11^th Five Year Plan, China should speed up the readjustment of the industrial structure and energetically develop the energy-efficient technologies and clean fuel technology, which will effectively promote the country to reduce CO₂ emission and contribute to the mitigation of climate change.