Inter-regional linkage analysis of industrial CO2 emissions in China: An application of a hypothetical extraction method

As the largest CO2 emitter in the world, China has faced great pressure to mitigate its CO2 emissions. Thus, issues related to CO2 emissions in China have been widely studied. However, the industrial linkages of CO2 emissions at the regional level have been less concerned. This study integrates hypothetical extraction method with the multi-regional input-output model, and investigates industrial CO2 emission linkages of China at the regional level. Based on the data of China in 2007, which decomposes China into eight regions, this study first analyzes the production-based emission (PBE) and consumption-based emission (CBE) of each region. The PBE and CBE of 10 branches are then analyzed and decomposed into three parts. Finally, this study decomposes the externally produced embodied emission (EPEE) and internally produced embodied emission (IPEE) of Petrochemicals and Minerals in the East Coast, to illustrate how these two indicators of a branch affect other branches in the economy. Results show that regions with large PBE, such as coastal regions and Central, usually have large CBE, whereas Jing-jin has the smallest PBE and CBE. Branches such as Mining and Petrochemicals and Minerals, have large PBE and are net CO2 emission exporters; while Construction and Other Services are net importers. According to the decomposition results of PBE and CBE, branches can be classified into four groups. The decomposed IPEE and EPEE of Petrochemicals and Minerals in the East Coast show that from the perspective of regions, CO2 emissions this branch exports to and imports from East Coast are most. From the perspective of branches, decomposition of IPEE shows that Petrochemicals and Minerals in the East Coast exports a large amount of CO2 emissions to Construction, while the decomposition results of EPEE show that the studied branch imports least CO2 emissions from Construction. Policy implications deduced from this study are discussed.