Decomposing the change of CO2 emissions in China: A distance function approach

This paper examines the sources of change in carbon dioxide (CO2) emissions. It evaluates the relative contributions of the sources to emission abatement using a new empirical approach. The method uses the data envelopment analysis (DEA) technique to decompose emission change into seven components based on the Shephard output distance function. It allows for cross-sectional analysis under flexible data requirement. The method accounts for factors that increase CO2 emissions, as well as decrease them. With the application of decomposing change in Chinaʹs CO2 emissions at the provincial level between the years 1991 and 2006, the study finds that 1) GDP scale effect accounts for the majority of emission increments; 2) the emission index associated with capital is a dominant contributor to emission abatement; and 3) the effects of technical change in production and change in the GDP composition by sector play positive roles in shrinking emissions.