Exploring sources of China's CO2 emission: Decomposition analysis under different technology changes

This study proposes a decomposition approach based upon data envelopment analysis that identifies various sources of CO2 emission. In addition to the previously identified seven sources, we propose three new ones. As an empirical application, this study applies the proposed approach to examine ten sources of CO2 emission across Chinese provinces from 2008 to 2015. In the empirical study, we overcome methodological difficulties related to (a) what methodological merits of technology change indexes are and how to measure them in a separated manner and (b) how to separate effects of various sources and how to identify the annual shift of those sources of CO2 emission changes. This study finds three empirical implications. First, three sources may increase the amount of CO2 emission. They include an economic activity, a technology change on a desirable output and a potential energy intensity change. Second, two sources are important in reducing the amount of CO2 emission. They are an operational efficiency change on a desirable output and a change in energy saving technology. Finally, conflicting results exist in some sources in the manner that they increase CO2 emission in some provinces but decrease it in the other provinces.