Advertisement

Environmental and Resource Economics

, Volume 61, Issue 4, pp 615–640 | Cite as

Consumption-Based Adjustment of Emissions-Intensity Targets: An Economic Analysis for China’s Provinces

  • Marco Springmann
  • Da Zhang
  • Valerie J. Karplus
Article

Abstract

China’s Twelfth Five-Year Plan (2011–2015) aims to achieve a national carbon intensity reduction of 17 % through differentiated targets at the provincial level. Allocating the national target among China’s provinces is complicated by the fact that more than half of China’s national carbon emissions are embodied in interprovincial trade, with the relatively developed eastern provinces relying on the center and west for energy-intensive imports. This study develops a consistent methodology to adjust regional emissions-intensity targets for trade-related emissions transfers and assesses its economic effects on China’s provinces using a regional computable-general-equilibrium (CGE) model of the Chinese economy. This study finds that in 2007 China’s eastern provinces outsource 14 % of their territorial emissions to the central and western provinces. Adjusting the provincial targets for those emissions transfers increases the reduction burden for the eastern provinces by 60 %, while alleviating the burden for the central and western provinces by 50 % each. The CGE analysis indicates that this adjustment could double China’s national welfare loss compared to the homogenous and politics-based distribution of reduction targets. A shared-responsibility approach that balances production-based and consumption-based emissions responsibilities is found to alleviate those unbalancing effects and lead to a more equal distribution of economic burden among China’s provinces.

Keywords

Climate policy China Emissions-intensity targets  Regional development Emissions embodied in trade Emission transfers Computable general equilibrium modeling 

Notes

Acknowledgments

The authors thank Eni S.p.A., ICF International, Shell International Limited, and the French Development Agency (AFD), founding sponsors of the China Energy and Climate Project. We are also grateful to the AXA Research Fund, which supported Marco Springmann’s doctoral research. We further acknowledge support provided by the Ministry of Science and Technology of China, the National Development and Reform Commission, and Rio Tinto. This work was also supported by the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors and Federal grants. We are also grateful to John Reilly, Sergey Paltsev, Henry Jacoby and Audrey Resutek for helpful comments and suggestions on earlier versions of this manuscript.

References

  1. Armington PS (1969) A theory of demand for products distinguished by place of production. Int Monet Fund Staff Pap 16(1):159–176CrossRefGoogle Scholar
  2. Bastianoni S, Pulselli FM, Tiezzi E (2004) The problem of assigning responsibility for greenhouse gas emissions. Ecol Econ 49(3):253–257CrossRefGoogle Scholar
  3. Böhringer C, Carbone JC, Rutherford TF (2011) Embodied carbon tariffs. NBER Working Paper No. 17376, National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  4. Davis SJ, Caldeira K (2010) Consumption-based accounting of \(\text{ CO }_{2}\) emissions. PNAS 107(12):5687–5692CrossRefGoogle Scholar
  5. Dirkse SP, Ferris MC (1995) The PATH solver: a non-monotone stabilization scheme for mixed complementarity problems. Optim Method Softw 5:123–156CrossRefGoogle Scholar
  6. Fan S, Kanbur R, Zhang X (2011) China’s regional disparities: experience and policy. Rev Dev Financ 1(1):47–56CrossRefGoogle Scholar
  7. Feng K, Siu YL, Guan D et al (2012) Analyzing drivers of regional carbon dioxide emissions for China. J Ind Ecol 16(4):600–611CrossRefGoogle Scholar
  8. Feng K, Hubacek K, Guan D (2009) Lifestyles, technology and \(\text{ CO }_{2}\) emissions in China: a regional comparative analysis. Ecol Econ 69(1):145–154CrossRefGoogle Scholar
  9. Gallego B, Lenzen M (2005) A consistent input–output formulation of shared producer and consumer responsibility. Econ Syst Res 17(4):365–391CrossRefGoogle Scholar
  10. Guo J, Zhang Z, Meng L (2012) China’s provincial \(\text{ CO }_{2}\) emissions embodied in international and interprovincial trade. Energy Policy 42:486–497CrossRefGoogle Scholar
  11. Han G, Olsson M, Hallding K et al. (2012) China’s carbon emission trading: an overview of current development. FORES Study 2012:1, FORES, Stockholm, SwedenGoogle Scholar
  12. International Energy Agency (IEA) (2007) World energy outlook 2007: China and India insights. France, ParisGoogle Scholar
  13. Jacoby HD, Reilly JM, McFarland JR et al (2006) Technology and technical change in the MIT EPPA model. Energy Econ 28(5):610–631CrossRefGoogle Scholar
  14. Keidel A (2009) Chinese regional inequalities in income and well-being. Rev Income Wealth 55(SI1):538–561Google Scholar
  15. Lenzen M, Murray J, Sack F et al (2007) Shared producer and consumer responsibility—theory and practice. Ecol Econ 61(1):27–42CrossRefGoogle Scholar
  16. Liang QM, Fan Y, Wei YM (2007) Multi-regional input-output model for regional energy requirements and \(\text{ CO }_{2}\) emissions in China. Energy Policy 35(3):1685–1700CrossRefGoogle Scholar
  17. Lin B, Sun C (2010) Evaluating carbon dioxide emissions in international trade of China. Energy Policy 38(1):613–621CrossRefGoogle Scholar
  18. Liu Z, Geng Y, Lindner S et al (2012) Uncovering China’s greenhouse gas emission from regional and sectoral perspectives. Energy 45(1):1059–1068CrossRefGoogle Scholar
  19. Mathiesen L (1985) Computation of economic equilibria by a sequence of linear complementarity problems. Econ Equilib Model Formul Solut 23:144–162CrossRefGoogle Scholar
  20. Meng L, Guo J, Chai J et al (2011) China’s regional \(\text{ CO }_{2}\) emissions: characteristics, inter-regional transfer and emission reduction policies. Energy Policy 39(10):6136–6144CrossRefGoogle Scholar
  21. Munksgaard J, Pade L, Minx J et al (2005) Influence of trade on national \(\text{ CO }_{2}\) emissions. Int J Glob Energy 23(4):324–336CrossRefGoogle Scholar
  22. Munksgaard J, Pedersen KA (2001) \(\text{ CO }_{2}\) accounts for open economies: producer or consumer responsibility? Energy Policy 29(4):327–334CrossRefGoogle Scholar
  23. Narayanan BG, Aguiar AH, McDougall R (eds) (2012) Global trade, assistance, and production: the GTAP 8 data base, center for global trade analysis. Purdue UniversityGoogle Scholar
  24. National Statistics Bureau of China (2008) 2007 China Energy Statistical Yearbook. National Statistical Bureau of China, Beijing, ChinaGoogle Scholar
  25. National Statistics Bureau of China (2011) 2007 China Regional Input-Output Tables. National Statistical Bureau of China, Beijing, ChinaGoogle Scholar
  26. Ohshita S, Price L, Zhiyu T (2011) Target allocation methodology for China’s Provinces: energy Intensity in the 12th Five-Year Plan. Report No. LBNL-4406E, Lawrence Berkeley National LaboratoryGoogle Scholar
  27. Paltsev S, Reilly JM, Jacoby HD et al. (2005) The MIT emissions prediction and policy analysis (EPPA) model: version 4. Report No. 125, Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Boston, MAGoogle Scholar
  28. Peters GP, Minx JC, Weber CL et al (2011) Growth in emission transfers via international trade from 1990 to 2008. PNAS 108(21):8903–8908CrossRefGoogle Scholar
  29. Peters GP, Hertwich EG (2008) \(\text{ CO }_{2}\) embodied in international trade with implications for global climate policy. Environ Sci Technol 42(5):1401–1407CrossRefGoogle Scholar
  30. Rutherford TF (1995) Extension of GAMS for complementarity problems arising in applied economic analysis. J Econ Dyn Control 19(8):1299–1324CrossRefGoogle Scholar
  31. Rutherford TF (1999) Applied general equilibrium modeling with MPSGE as a GAMS subsystem: an overview of the modeling framework and syntax. Comput Econ 14:1–46CrossRefGoogle Scholar
  32. Shui B, Harriss RC (2006) The role of \(\text{ CO }_{2}\) embodiment in US–China trade. Energy Policy 34(18):4063–4068CrossRefGoogle Scholar
  33. State Council of China (1986) The 7th Five Year Plan for National Economic and Social Development of the People’s Republic of China, 1986–1990Google Scholar
  34. State Council of China (2012) Inform on issuing the scheme of greenhouse gas emission control during the Twelfth Five-Year PlanGoogle Scholar
  35. Sue Wing I (2004) Computable general equilibrium models and their use in economy-wide policy analysis. Technical Note No. 6, MIT Joint Program on the Science and Policy of Global ChangeGoogle Scholar
  36. Wang T, Watson J (2008) China’s carbon emissions and international trade: implications for post-2012 policy. Clim Policy 8(6):577–587CrossRefGoogle Scholar
  37. Wei C, Ni J, Du L (2011) Regional allocation of carbon dioxide abatement in China. China Econ Rev 23(3):552–565CrossRefGoogle Scholar
  38. Wiedmann T, Lenzen M, Turner K et al (2007) Examining the global environmental impact of regional consumption activities—part 2: review of input–output models for the assessment of environmental impacts embodied in trade. Ecol Econ 61(1):15–26CrossRefGoogle Scholar
  39. World Bank (2009) China: mid-term evaluation of China’s Eleventh Five-Year. World Bank, Washington DCGoogle Scholar
  40. Wyckoff AW, Roop JM (1994) The embodiment of carbon in imports of manufactured products: implications for international agreements on greenhouse gas emissions. Energy Policy 22(3):187–194CrossRefGoogle Scholar
  41. Yi WJ, Zou LL, Guo J et al (2011) How can China reach its \(\text{ CO }_{2}\) intensity reduction targets by 2020? A regional allocation based on equity and development. Energy Policy 39(5):2407–2415CrossRefGoogle Scholar
  42. Zhang D, Rausch S, Karplus V et al. (2012) Quantifying regional economic impacts of \(\text{ CO }_{2}\) intensity targets in China. Report No. 230, MIT Joint Program on the Science and Policy of Global ChangeGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Marco Springmann
    • 1
  • Da Zhang
    • 2
    • 3
  • Valerie J. Karplus
    • 2
  1. 1.Department of EconomicsUniversity of OldenburgOldenburgGermany
  2. 2.Joint Program of the Science and Policy of Global ChangeMassachusetts Institute of TechnologyCambridgeUSA
  3. 3.Institute of Energy, Environment and EconomyTsinghua UniversityBeijingChina

Personalised recommendations