Analysis of CO2 Emissions in China’s Manufacturing Industry Based on Extended Logarithmic Mean Division Index Decomposition

Abstract

China is the world’s largest emitter of CO2. As the largest sector of China’s fossil energy consumption and carbon emissions, manufacturing plays an important role in achieving emission reduction targets in China. Using the extended logarithmic mean division index (LMDI) decomposition model, this paper decomposed the factors that affect the CO2 emissions of China’s manufacturing industry into eight effects. The results show the following: (1) China’s manufacturing CO2 emissions increased from 1.91 billion tons in 1995 to 6.25 billion tons in 2015, with an average annual growth rate of 6%. Ferrous metal smelting and rolling were the largest sources of carbon dioxide emissions, followed by chemical raw materials and products and then non-metallic minerals. (2) During the research period, the industrial activity effects were the most important factor leading to increased CO2 emissions in manufacturing and energy intensity was the most important factor in promoting the reduction of CO2 emissions from manufacturing. The investment intensity was the second most influential factor leading to the increase in China’s manufacturing CO2 emissions after the industrial scale and this even exceeded the industrial activity effect in some time periods (2000–2005). R&D efficiency and R&D intensity were shown to have significant roles in reducing CO2 emissions in China’s manufacturing industry. The input of R&D innovation factors is an effective way to achieve emission reductions in China’s manufacturing industry. (3) There were differences in the driving factors of CO2 emissions in the manufacturing industry in different periods that were closely related to the international and domestic economic development environment and the relevant policies of the Chinese government regarding energy conservation and emission reduction. (4) Sub-sector research found that the factors that affect the reduction of CO2 emissions in various industries appear to be differentiated. This paper has important policy significance to allow the Chinese government to implement effective energy-saving and emission reduction measures and to reduce CO2 emissions from the manufacturing industry.