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How does firm heterogeneity information impact the estimation of embodied carbon emissions in Chinese exports?

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  • Yu, Liu
  • Meng, Bo
  • Hubacek, Klaus
  • Xue, Jinjun
  • Feng, Kuishuang
  • Gao, Yuning

Abstract

Using an augmented Chinese input–output table in which information about firm ownership and type of traded goods are explicitly reported, we show that ignoring firm heterogeneity causes embodied CO2 emissions in Chinese exports to be overestimated by 20% at the national level, with huge differences at the sector level, for 2007. This is because different types of firm that are allocated to the same sector of the conventional Chinese input–output table vary greatly in terms of market share, production technology and carbon intensity. This overestimation of export-related carbon emissions would be even higher if it were not for the fact that 80% of CO2 emissions embodied in exports of foreign-owned firms are, in fact, emitted by Chinese-owned firms upstream of the supply chain. The main reason is that the largest CO2 emitter, the electricity sector located upstream in Chinese domestic supply chains, is strongly dominated by Chinese-owned firms with very high carbon intensity.

Suggested Citation

  • Yu, Liu & Meng, Bo & Hubacek, Klaus & Xue, Jinjun & Feng, Kuishuang & Gao, Yuning, 2016. "How does firm heterogeneity information impact the estimation of embodied carbon emissions in Chinese exports?," IDE Discussion Papers 592, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper592
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental problems; Global warming; Input-output tables; Embodied CO2 emissions; Carbon intensity; Supply chains; Ownership; Processing trade;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment

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