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Evolution of Carbon Shadow Prices in China’s Industrial Sector during 2003–2017: A By-Production Approach

Author

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  • Wenyin Cheng

    (School of Public Policy and Management, Tsinghua University, Beijing 100084, China
    Cheng W. and Yang Z. share the first co-authorship.)

  • Zhusong Yang

    (School of Public Policy and Management, Tsinghua University, Beijing 100084, China
    Cheng W. and Yang Z. share the first co-authorship.)

  • Xia Pan

    (School of Statistics and Mathematics, Central University of Finance and Economics, Beijing 100081, China)

  • Tomas Baležentis

    (Division of Farm and Enterprise Economics, Lithuanian Institute of Agrarian Economics, 03220 Vilnius, Lithuania)

  • Xueli Chen

    (School of Languages and Media, Anhui University of Finance and Economics, 962 Caoshan Road, Bengbu 233030, China
    Institute of Journalism and Communication, Chinese Academy of Social Sciences, Beijing 100732, China)

Abstract

Global warming and the rapid growth of carbon emissions have attracted the attention of governments and academia throughout the world. In 2006, China surpassed the United States as the emitter of the greatest volume of carbon, the largest contribution of which is derived from China’s industrial sector. This study investigated the evolution of industrial carbon shadow prices (CSPs) in China at the provincial level to assess the opportunity costs in terms of value added foregone owing to decreasing carbon emissions. A dual formulation of the by-production data envelopment analysis (DEA) model was applied to estimate the industrial carbon abatement costs in China during 2003–2017. This study represents the first attempt to apply the dual by-production DEA model for this purpose. Empirical results showed that industrial CSP increased by 3.83% annually and that the average provincial CSP was approximately $562.43 USD/ton. A significant upturn in the CSP occurred after 2006. Furthermore, disparities of changes in industrial CSP over time were checked using the test of sigma convergence. Regional divergence was observed for the period 2011–2017. Policy implications were derived from the empirical results in terms of improvements regarding carbon abatement.

Suggested Citation

  • Wenyin Cheng & Zhusong Yang & Xia Pan & Tomas Baležentis & Xueli Chen, 2020. "Evolution of Carbon Shadow Prices in China’s Industrial Sector during 2003–2017: A By-Production Approach," Sustainability, MDPI, vol. 12(2), pages 1-14, January.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:2:p:722-:d:310568
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