Driving Factors of Carbon Emissions in China's Municipalities: A LMDI Approach

Abstract China, as the world’s largest carbon dioxide emitter, is bound to assume the important responsibility of energy conservation and emission reduction. To this end, each city, led by representative municipalities directly under the Central Government, must enhance efforts in carbon emission reduction to jointly realize China’s low-carbon transition. Taking four representative municipalities, namely, Beijing, Tianjin, Shanghai, and Chongqing as the case cities, this paper establishes a decomposition analysis for the driving factors of carbon emissions by applying the LMDI method covering data from 2007 to 2017. Kaya identity is used to decompose the effects into eight driving factors: GDP effect, industrial structure effect, energy intensity effect, overall energy structure effect, population effect, urbanization effect, per capita energy consumption effect, urban and rural energy structure effect. The results show that at the municipality level, the driving factors that promote the growth of carbon emissions are the GDP growth effect and the population effect, with the former still being the most important factor in the municipalities with faster economic growth; and industrial structure effect is the most important factor that inhibits the growth of carbon emissions, followed by energy structure effect. The paper thereby puts forward policy implications for China's economic policies.