An analysis of the driving forces of energy-related carbon dioxide emissions in China's industrial sector

Both energy consumption and the growth of carbon dioxide (CO₂) emissions in China are attributed to the industrial sector. Energy conservation and CO₂ emissions reduction in China's industrial sector is decisive for achieving a low-carbon transition. We analyze the change of energy-related CO₂ emissions in China's industrial sector from 1991 to 2010 based on the Logarithmic Mean Divisia Index (LMDI) method. Results indicate that industrial activity is the major factor that contributes to the increase of industrial CO₂ emissions while energy intensity is the major contributor to the decrease of CO₂ emissions. Industry size shows a varying trend interchanging intervals of growth along the study period. Moreover, both energy mix and carbon intensity of energy use have negative effects on the increase of CO₂ emissions. The cointegration method is adopted to further explore determinants of CO₂ emissions in China's industrial sector. Results show that there exists a long-run relationship between industrial CO₂ emissions and affecting factors such as CO₂ emissions per unit of energy consumption, industrial value added, labor productivity and fossil fuel consumption. China's industrial CO₂ emissions are mainly attributed to the coal-dominated energy structure. Policy suggestions are thus provided to reduce industrial CO₂ emissions in China.