Changes of Carbon Emission in Chinese Regional Economy: A Decomposition Analysis Using Nested Logarithmic Mean Divisia Approach

This paper describes a nested logarithmic mean Divisia approach and analyzes the potential factors influencing the changes in carbon emission in Chinese northwest region for the period 1995-2010. The analysis is performed by decomposing annual carbon emission into components representing changes in economic activity, economic structure, energy mix, and energy intensity, population growth, population structure, as well as changes in per capita energy consumption and emission factor. This paper argues that the vast majority of changes in carbon emissions since 1995 are due to economic activity and energy intensity, where the former is found to be a predominant role in rising carbon emission and the later contributing dominantly to decreasing carbon emission. Moreover, the economic structure, population growth, and population structure effects are all found responsible for carbon emissions in the region, although their effects reverse in different time period. Besides, the decreases in carbon emission, however, are attributable mainly to per capita energy consumption and energy mix. There is no doubt that the current emission profile poses significant challenges to the local government’s policies for emission reduction. It is of vital importance to take into account the regional and stage characteristics of influences on carbon emission for policy making.