Decomposition Analysis of Regional Embodied Carbon Flow and Driving Factors—Taking Shanghai as an Example

Developing localized climate mitigation strategies requires understanding how national consumption drives local carbon dioxide (CO 2 ) emissions from a sectoral perspective. Exploring the carbon footprint considering inter-provincial trade is vitally important; however, few studies have explored the production side of embodied carbon emissions and the drivers of embodied carbon. Here, we use the multi-regional input–output model to calculate the flow of embodied carbon between provincial departments on Shanghai’s production side in 2012, 2015, and 2017. We also establish a decomposition method for the embodied carbon index with small data demand. Our results show that from 2012 to 2017, the outflow increased and went to tertiary industries in neighboring and economically developed provinces. Among them, the activity effect drove the increase in carbon emissions, and the technique effect drove the reduction in embodied carbon. Surprisingly, we found that the low efficiency of the energy utilization of metal products and the unreasonable structure of other services increased embodied carbon emissions from 2012 to 2015. Sectors with high exogenous embodied carbon emissions are critical areas in which collaborative mitigation efforts between Shanghai and downstream provinces drive these emissions. Shanghai should avoid falling into the “low-carbon trap” of developing countries. It should continue to adjust its industrial structure and increase the use of low-carbon energy to achieve carbon reduction.