Changes in carbon intensity in China's industrial sector: Decomposition and attribution analysis

The industrial sector accounts for 70% of the total energy-related CO2 emissions in China. To gain a better understanding of the changes in carbon intensity in China's industrial sector, this study first utilized logarithmic mean Divisia index (LMDI) decomposition analysis to disentangle the carbon intensity into three influencing factors, including the emission coefficient effect, the energy intensity effect, and the structure effect. Then, the analysis was furthered to explore the contributions of individual industrial sub-sectors to each factor by using an extension of the decomposition method proposed in Choi and Ang (2012). The results indicate that from 1996 to 2012, the energy intensity effect was the dominant factor in reducing carbon intensity, of which chemicals, iron and steel, metal and machinery, and cement and ceramics were the most representative sub-sectors. The structure effect did not show a strong impact on carbon intensity. The emission coefficient effect gradually increased the carbon intensity, mainly due to the expansion of electricity consumption, particularly in the metal and machinery and chemicals sub-sectors. The findings suggest that differentiated policies and measures should be considered for various industrial sub-sectors to maximize the energy efficiency potential. Moreover, readjusting the industrial structure and promoting clean and renewable energy is also urgently required to further reduce carbon intensity in China's industrial sector.