Household Energy Use and Carbon Emissions in China: A Decomposition Analysis

Transcription

1 1 2 Hosehold Enegy Use and Cabon Emissions in China: A Decomposition Analysis Qin ZHU 1 and Taoyan WEI 2 * 1 School of Social Development and Pblic Policy, Fdan Univesity, Shanghai , PR China ( zhqin@fdan.ed.cn). 2 * Coesponding atho. Cente fo Intenational Climate and Envionmental Reseach - Oslo (CICERO), P.O. Box 1129 Blinden, 0318 Oslo, Noway. Tel: Fax: taoyan.wei@ciceo.io.no. Abstact Althogh its pe capita cabon emissions ae still elatively low, China s aggegated cabon emissions have gown by nealy 4-fold in the last thee decades, and now it is the biggest CO2 emitte in the wold. Thee ae many easons fo this emissions gowth, and mch emphasis has been placed on indstial development, bt pevios eseach has estimated that 40% of the gowth in Chinese CO2 emissions ove the 15 yeas to 2007 can be attibted to hosehold enegy consmption. In this pape, we condct a decomposition analysis to show that in the peiod fom 1978 to 2008 nealy 60% of the gowth in Chinese hosehold emissions can be attibted to the inceasing nmbe of hoseholds and 40% to inceasing emissions pe hosehold. We also show that ove this peiod emissions gowth in ban hoseholds has been six times that of al hoseholds. These eslts have impotant implications fo policy makes seeking to pomote edctions in China s CO2 emissions, elating fo example to family planning and banization Keywods: hoseholds; poplation; Responsibility; decomposition; cabon emissions; China; Policy

2 27 1 Intodction The histoy of developed conties shows that indsty is the majo soce of new cabon dioxide (CO2) emissions in the development pocess. Howeve, a consideable popotion of indstial emissions ae eleased in ode to satisfy the demand fom hoseholds fo consmption. If these indstial emissions ae attibted to hosehold consmption, then hosehold consmption becomes one of the majo soces of CO2 emissions. Fo example, moe than 30% of CO2 emissions in U.S. ae diectly elated to hosehold consmption (Vandenbegh et al., 2010) and 40% of the emission gowth in China in the peiod fom can be attibted to hoseholds fo consmption (Minx et al., 2011). The impotant ole of hosehold consmption shold not be ovelooked by policy makes since thee is potential fo enegy policies and nmeos othe policies - to change hosehold consmption behavio to edce enegy consmption and associated emissions. Bette ndestanding of hosehold enegy se and decision-making pocesses is theefoe necessay if effective policies and pogams ae to be intodced (Dietz et al., 2013) China has achieved apid economic development by adopting the efom and openingp policy since 1978 and it is now the second biggest economy in the wold. With the steady gowth of poplation and levels of banization, aveage living standads in China have been impoved continosly. Howeve, enegy consmption and the associated cabon emissions have inceased consideably ove the past thee decades so that China has become the biggest aggegate CO2 emitte in the wold (Le Qéé et al. 2013). 1

3 Since 2007, the Chinese cental govenment has stated to pblish key policies to contol emissions in China's National Climate Change Pogam. In the 2012 epot on policies and actions fo addessing climate change (NDRC, 2012), the geneal pblic is encoaged to edce cabon emissions in daily life by means of knowledge dissemination activities, bt no specific policies o actions tageting enegy se in hoseholds have yet been adopted. In 2012, hosehold consmption acconted fo 36% of Chinese GDP (NBSC, 2013) and it is expected to incease fthe in the fte. Consideing the high shae of hosehold consmption in the economy, it is necessay to exploe the impotant ole of hoseholds in cabon emission abatement Thee is an agment that the family planning policy adopted in China since 1970s has helped cabon emissions edction with estimates of the impacts vaying between 100 million (Wang and Cai, 2010) and 400 million biths pevented (Li, 2009). Cently the debate on the policy is going on and the stict policy has been elaxed slightly as pat of the esponse to an ageing society and this cold have impotant implications fo enegy se and cabon emissions. Howeve, Sattethwaite (2009) shows that the gowth in poplation does not necessaily dive the gowth in geenhose gas (GHG) emissions bt athe that the gowth in consmes and in thei levels of consmption does. Since membes of a hosehold often make consmption decisions as a joint nit, it seems moe plasible to conside the gowth in hoseholds athe than poplation as one of key dives of the emission gowth. 2

4 Rapid economic gowth in China has also been accompanied by apid banization in the past thee decades, leading to moe hoseholds living in cities and less in al aeas. The shae of ban poplation has damatically inceased fom 18% in 1978 to 53% in 2012 (NBSC, 2013) and is expected to keep inceasing in the nea fte. The movement of a peson fom a al to an ban aea implies significant change in lifestyle, and this has impotant implications fo enegy consmption. Leaving ot self-podced enegy fo instance fom bning fiewood - the commecial enegy (i.e. pchased fel and electicity, which ae inclded in the official statistics system) se pe capita of ban hoseholds in China was nealy 1.5 times of al hoseholds in 2011 (NBSC, 2012a), bt it is impotant to note that the aveage income of ban hoseholds was moe than thee times that al hoseholds at this time (NBSC, 2012b) In this pape, we examine the contibtion that the changing level and composition of hosehold enegy consmption makes to Chinese cabon emissions so that the impacts of vaios types of hoseholds on emission gowth in China can be estimated. Fistly, we estimate the contibtions to emission gowth of hoseholds in China in the peiod fom Afte the impact of the inceasing nmbe of hoseholds is sepaated fom impact of changing emissions pe hosehold, we fthe exploe impact of edcing hosehold size and othe deteminants of emissions gowth fom al and ban hoseholds espectively. 3

5 The emainde of the pesent pape is oganized as follows. The next section jstifies the methodology adopted in this stdy. Section 3 biefly descibes the time seies data sed in the analysis, and Section 4 offes eslts and analysis on the contibtions to emission gowth of hoseholds. Section 5 offes discssions on the policy implications and sensitivity analyses of o stdy, and the last section concldes the pape Methodology In ode to estimate the impacts of changes in both the nmbe and the size of hoseholds on emission gowth, we adopt a complete two-stage decomposition appoach that Hoeksta and van den Begh (2003) call the efined Divisia method. As with othe decomposition appoaches, the two-stage appoach assmes the popotional effects of each deteminant on cabon emissions, othe things being eqal Decomposition appoaches in envionmental stdies can be dated back to the widely applied IPAT acconting model that was fist poposed in the ealy 1970s to analyze impotant deteminants of anthopogenic envionmental impacts (Ehlich and Holden, 1971, 1972). The IPAT model categoizes thee deteminants of envionmental impact (I) as poplation size (P), afflence (A) epesented by pe capita consmption o podction, and technology (T) to capte the effects of all the othe factos and assmes that each has a popotional effect on the envionment. The IPAT model is a 4

6 good stating point to help ndestand the impacts of hman behavio on envionment, and it is also the basic eqation behind o eseach Pevios eseach has condcted decomposition analyses to examine the deteminants on cabon emissions in China. At least fo stdies focs on changes in lifestyles. Wei et al. (2007) qantify the impacts of the lifestyles of ban and al esidents on China's enegy se and the elated CO2 emissions ding the peiod based on the application of a consme lifestyle appoach (CLA).They find that 30 pe cent of CO2 emission ae conseqences of esidents lifestyles and elated economic activities. Feng et al. (2009) se the IPAT model to analyze the impacts of changing levels of income and banization and changing lifestyles on the gowth of CO2 emissions of five egions in China ove the peiod of They find that technological impovements have not been able to compensate flly fo the incease in emissions de to poplation gowth and inceasing wealth. Minx et al. (2011) adopt a stctal decomposition analysis (SDA) appoach to stdy the explanatoy factos behind the apid gowth of cabon emissions in China. They conclde that Ubanization and the associated changes in lifestyle ae shown to be moe impotant than othe socio-demogaphic dives like the deceasing hosehold size o gowing poplation. Hbacek et al. (2012) find that the contibtion of poplation gowth to emissions in China has been elatively small since the late 1970s, and thee is a hge dispaity between ban and al hoseholds in tems of changes of lifestyle and consmption pattens. 5

7 Othe stdies focs on enegy se. Zhang (2000) decomposes China's CO2 emissions ding to exploe the histoical contibtions of fel switching, enegy consevation, economic gowth and poplation expansion ove time, and incldes that China has made a significant contibtion to edcing global CO2 emissions in tems of continos decease in enegy intensity. Wang et al. (2005) focs on the impacts of enegy-elated deteminants sing time seies fom 1957 to 2000, and indicate that China has achieved a consideable decease in its CO2 decease mainly de to impoved enegy intensity, moeove, fel switching and enewable enegy penetation also contibte to CO2 edction. Zhang et al. (2009) also focs on enegy-elated deteminants even thogh they adopt a diffeent decomposition method sing time seies fom 1991 to In thei stdy, enegy intensity effect is confimed again as the dominant contibto to the decline in CO2, in addition, economic stcte and CO2 emission coefficient effects ae fond to contibte little to the changes in CO2 emission. Zha et al. (2010) estimate and compae the CO2 emissions in China fom ban and al esidential enegy consmption fom 1991 to 2004 by applying the index decomposition analysis (IDA) appoach, and find that the poplation effect contibtes to the incease of esidential CO2 emissions with a ising tendency in ban aea, while it keeps deceasing since 1998 in al China. Ma and Sten (2008) investigate China s cabon emissions ding with a paticla focs on the ole of biomass sing the logaithmic mean Divisia index (LMDI) method. They inclde that a shift fom biomass to commecial 6

8 enegy inceases cabon emissions, and the positive effect of poplation gowth has been deceasing ove the obseved peiod In all of these stdies, the shae of emissions attibted to hoseholds is typically associated with hosehold consmption, diectly o indiectly. The emissions elated to investments and expots ae not taken as contibtions of hoseholds. In o stdy, we age that all emissions shold be attibted to hoseholds fo cent and fte consmption. Total emissions ae geneated to meet demand fom hoseholds fo cent consmption and non-hoseholds fo investments and expots. Fo example, 27% of total Chinese emissions in 2007 can be attibted to expots to satisfy foeign demand (Minx et al., 2011). Consmption-based appoaches wold attibte esponsibility fo these emissions not to Chinese podces bt instead to foeign consmes(mnksgaad and Pedesen, 2001). Howeve, Chinese hoseholds eceive income fom satisfying the expot demand that will be sed fo consmption and fte investments that aim to ceate income fo fte consmption. Theefoe, emissions elated to cent expots and investments can be seen as contibtions to fte hosehold consmption. Hence, all emissions can be attibted to domestic hoseholds since the emissions ae eleased fo eithe cent o fte consmption of the hoseholds. In ode to indicate the tadeoff between cent and fte consmption made by hoseholds at the aggegate level, we se the invesed consmption-gdp atio since GDP can be taken as a poxy fo the income of all hoseholds and income geneated 7

9 fom investments and expots that will be sed fo fte consmption. In o analysis, the income coesponding to the govenmental expendite is linked fo fte consmption even thogh pat of the income is sed fo cent consmption. The highe the consmption-gdp atio, the moe is the cent consmption and vice vesa. Hence, the invese of consmption-gdp atio indicates the income level (GDP) by assming cent consmption to be 1 and that the income is always geate than 1. The highe the invesed atio, the highe shae of income is saved fo fte consmption In o decomposition appoach, we highlight the ole of hoseholds and conside five deteminants o impact factos shaping cabon emissions, these ae the nmbe of hoseholds, hosehold size, hosehold consmption, goss domestic podct (GDP) and the cabon intensity of GDP in mainland China fom 1978 to Each of these deteminants o impact factos is boken down into ban and al hoseholds to highlight the diffeences between the contibtions fom the two hosehold gops. The details of the decomposition appoach ae descibed fthe in the Appendix Data desciption The data sed in o stdy addess the deteminants o impact factos otlined above. Cabon emissions fom fossil fels ae deived fom the data cente of the Cabon Dioxide Infomation Analysis Cente of Oak Ridge National Laboatoy, USA (CDIAC., 2011). Data on hosehold size, consmption, GDP and poplation, which is 8

10 sed to deive the nmbe of hoseholds, ae diectly taken fom a seies of China Statistical Yeabooks, annally pdated by National Bea of Statistics of China. Both GDP and consmption data ae compaable since they ae adjsted on the basis of 2000 constant pices The ban poplation sed to deive the nmbe of ban hoseholds is defined as total pemanent esidents who live in cities and towns in China. Moe specifically, the ban poplation incldes both egisteed esidents in an ban aea and the migants who have lived in that ban aea fo moe than half a yea bt have not egisteed as pemanent esidents in ban aea The development paths of vaiables in the IPAT identity (Eq. 1) ae pesented in Fige 1, indexed against 1978 vales. Ding the peiod, pe capita GDP (A) pesents the fastest gowth of nealy 12.5 times, followed by the cabon emissions (C, nealy 5 times), and poplation size (P, less than 1.4 times). The only deceasing vaiable is cabon intensity (T), which in 2008 becomes less than 30 pecent of the 1978 level. If we look into the shapes of the cves, we find that the cve of pe capita GDP (A) becomes steepe ove time, indicating an exponential tend. On the contay, cabon emissions gow smoothly ntil 1995, then level ot ntil 2002, and then speed p again to 2008 when the ate of gowth slows again Inset Fige 1 abot hee. 9

11 The nmbe of ban hoseholds in 2008 is moe than 5 times that of 1978, bt the nmbe of al hoseholds is only 1.3 times highe in 2008 than in On the othe hand, aveage hosehold size is continosly shinking fo both al and ban hoseholds. Ubanization plays an impotant ole in the pocess since an ban hosehold geneally consists of fewe membes than a al hosehold. Accoding to the data soces, if thee ae membes of a al hosehold who wok in cities, they ae conted as membes of the ban hosehold if they have stayed in the cities fo ove half a yea Pe capita GDP is divided into pe capita consmption and the invese of consmption-gdp atio. Ding the peiod, pe capita consmption inceases apidly. In 2008, it is 33 times and 27 times of the 1978 level fo ban and al hoseholds espectively. The invesed consmption-gdp atio is deceasing at the beginning of the peiod and inceasing afte By the end of the peiod, it is moe than 1.3 times of the 1978 atio. This indicates that althogh esidential consmption level gows damatically, its shae of GDP exhibits a decline tendency de to expot and investment incease at a faste speed ove this peiod Reslts and analysis 244 Uban hoseholds dominate emission gowth 10

12 By deploying the complete two-stage decomposition descibed in the Appendix, we calclate the cmlative changes in cabon emissions attibted to hoseholds as a whole (Fige 2). Cmlative emission gowth keeps inceasing in all yeas except slightly deceasing in 1998 and 1999, when Asia financial cisis happened. At the beginning of the peiod, ban hoseholds contibted almost the same emissions as al hoseholds even thogh in most yeas total emission gowth was dominated by the contibtions of ban hoseholds. Howeve, paticlaly since the 1990s, ban hoseholds have contibted mch moe to emissions gowth than al hoseholds. The tendency becomes moe obvios afte 2000 with the apid development of the hosing maket in ban aeas. As a eslt, ding the whole peiod, ban hoseholds contibte 1300 million metic tons (MMT) to emission gowth, acconting fo 85% of the total and six times that of the contibtion of al hoseholds. Howeve, we may oveestimate the contibtions of al hoseholds since they have a lowe saving ate and a lowe cabon intensity de to less se of fossil fels 1. If the pinciple of Common bt Diffeentiated Responsibility is applied at the hosehold level, then ban hoseholds wold have to take the majo esponsibility to edce emissions in the fte. Uban hoseholds shold be esponsible fo 85% of fte emission abatement if the emissions ding ae citeia fo distibtion of the emission abatement esponsibilities. Notice that emissions fom bioenegy ae not consideed in the stdy and al hoseholds se moe bioenegy in daily life fo 1 O decomposition appoach assmes the same saving ates and cabon intensity fo both ban and al hoseholds. 11

13 cooking and heating. Even thogh bioenegy ae consideed to be enewable and cabon netal, the bioenegy se also podces emissions of black cabon, which is a shot-lived geenhose gas bt might have consideable impacts on local climate (Bentsen et al., 2006; Joos et al., 2012) Inset Fige 2 abot hee Nmbe of hoseholds and emissions pe hosehold To fthe examine the ole of hoseholds, we conside the impact that both the nmbe of hoseholds and emissions pe hosehold have on emissions gowth. As shown in Fige 3, emission gowth attibted to the nmbe of total hoseholds ae gadally inceasing ove time and each a level of MMT in 2008, theeby acconting fo 56.5% of total cmlative emission gowth ding The effects of emissions pe hosehold ae negligible befoe 2003 bt stated to speed p ntil In Fige 3, we also list the contibtions of the nmbe of ban hoseholds and emissions pe ban hosehold espectively. Both of them follow the same patten bt ae slightly lowe than total hoseholds, indicating the dominant ole that ban hoseholds have on emissions gowth in the peiod. Convesely, the contibtion of the nmbe of al hoseholds keeps inceasing ntil the middle of 1990s achieving the peak of 100 MMT and then slightly deceases ntil Emissions pe al 12

14 hosehold ae almost stable befoe 2000 and then speed p shaply, the same as ban hoseholds, achieving a level of nealy 150 MMT in Inset Fige 3 abot hee Hosehold size Shinking hosehold sizes in both al and ban hoseholds eslt in less emission gowth pe hosehold (Fige 4). This seems contadict the obsevation that smalle hosehold size always leads to moe emission gowth. Howeve, if we focs only on one hosehold, the intition wold be the smalle hosehold size, the less enegy se. O positive effect of hosehold size coincides with the expectation and can be ndestood as diect effect of the hosehold size. The indiect negative effect of hosehold size is then capted by the impacts of an inceasing nmbe of hoseholds in o analysis. In addition, the positive effect of hosehold size is also consistent with the widely accepted assmption that less poplation implies less cabon emissions, othe things being eqal As a whole, we find that the deceased emission gowth de to the shinking hosehold size eaches a level of MMT in 2008, a level that is 18.5% of total obseved emission gowth ding the peiod. The contibtions of ban hoseholds ae slightly moe than that of al hoseholds ntil the ealy 1990s and then the gap between the two gops gadally enlaged. Howeve, the dominant ole of ban 13

15 hosehold size is not maked compaed to the effects of the nmbe of hoseholds and emissions pe hosehold. Inset Fige 4 abot hee Consmption pe capita We find that the cmlative contibtions fom consmption pe capita of all hoseholds keep inceasing to a level of 1602 MMT o 105.5% of total obseved emission gowth, slightly moe than the total obseved emission gowth in 2008 (Fige 5). This implies the effects on emission gowth of all othe deteminants almost cancel each othe ot, i.e., the positive effects of the nmbe of hoseholds and the invese of consmption-gdp atio ae almost cancelled ot by the negative effects of hosehold size and cabon intensity At the beginning of the peiod, al hoseholds contibte moe than doble the amont of ban hoseholds to emission gowth de to faste inceasing consmption pe capita alone. This eflects the fact that the oiginal efom in China was initiated fom al aea and fames benefited fom it ealie. Howeve, ban hoseholds continosly incease thei contibtion at a faste speed than al hoseholds so that by end of the peiod ban hoseholds contibte doble the emission gowth of al hoseholds. This also sggests geate esponsibility shold be given to ban hoseholds to edce cabon emissions in the fte. 330 Inset Fige 5 abot hee. 14

16 The tadeoff between cent and fte consmption The invesed consmption-gdp atio is sed to indicate the tadeoff between cent and fte consmption made by hoseholds at the aggegated level. Ding the peiod, the invesed consmption-gdp atio tends to incease ove time since moe and moe income has to be saved to meet the demand fo investments and expots. As a eslt, the cmlative contibtions fom the invesed atio tend to incease so that they achieve a level of MMT cabon emission gowth o 23.0% of total obseved emission gowth in 2008 (Fige 6). The inceased emissions de to the invesed atio ae expected to be edced o even to decease in the nea fte when hoseholds spend geate shae of thei income on cent consmption. Inset Fige 6 abot hee Cabon intensity Cabon intensity epesents a genealized concept of technology, inclding at least thee deteminants: the enegy consmption level pe nit otpt, the enegy mix, and the associated emissions pe nit enegy. Cabon intensity tends to be deceasing ove the peiod and is the majo deteminant leading to a consideable edction in emissions (Fige 6). Ding the peiod, the cmlative effects of cabon intensity eslt in moe than MMT cabon emissions edction o 66.5% of the total obseved cmlative emission gowth. 15

17 The cabon intensity inceased slightly only in 2003 and This leads to the invesed U-shape cve ding in Fige 6. This is mainly the eslt of changes in enegy intensity, i.e., enegy se pe nit GDP. A possible eason cold be the changes in indsty stcte that eslted fom the apid development of constction secto in China since Discssion We find that ban hoseholds ae the main dive of emissions gowth in China in the past thee decades, implying that these hoseholds shold have geate esponsibility fo emission edction in the fte. Nowadays China is at a demogaphic tning point, changing fom an agicltal society into an ban one, and fom a society attached to the land to a moe floating one (Peng, 2011). Ubanization in China is expected to contine in the next decades, and the dominant ole of ban hoseholds will be enhanced. Even thogh hosehold size may contine to shink fo a long peiod de to the inflence of banization and a floating poplation, a contination of the tend fom will mean moe hoseholds ae expected to emain in cities and to contibte moe to emission gowth in the fte. Theefoe, the dominant ole that ban hoseholds play in shaping emissions gowth will contine and moe policies tageting at ban hoseholds have to be made to edce cabon emissions in the fte

18 Howeve, the impovement of al hoseholds enegy se shold not be fogotten. De to the specialized ban al dalistic stcte, a significant dispaity exists between ban and al aeas in China and pe capita expendite of ban hoseholds has been 3.5 times that of al hoseholds fo the past decade (Zh and Peng 2012). The decomposition analysis of o eseach also shows that the contibtions to emission gowth of al hoseholds ae mch smalle than ban hoseholds. Consideing the social and economic ineqality between al and ban hoseholds, moe financial and technological sppot shold be povided to spead the application of clean enegy in al aeas, so that al esidents basic ight to svival and development can be well espected and potected. This povision wold also be an embodiment of the pinciple of Common bt Diffeentiated Responsibility at the hosehold level The effects of both the changing nmbe of hoseholds and edctions hosehold size can be smmed p to the effect of poplation incease. Fom 1978 to 2008, poplation inceases contibte 578 MMT o 38.1% of the total obseved emission gowth. A consevative estimate of the impacts of the family planning policy in China is that it pevented abot 100 million biths (Wang and Cai, 2010). Accoding to o ogh appoach, if the nbon poplation wee added to ceate moe hoseholds with hosehold size and consmption pe capita kept the same as the histoical data, then we wold have additional 65 MMT of emission gowth. If, on the othe hand, the nbon poplation wee to incease hosehold size while the nmbe of hoseholds and consmption pe capita ae kept at the same histoical level, then we wold have 17

19 additional 21 MMT emission gowth. Hence, the effect of changing the family planning policy in the nea fte is qite ncetain In fact, the natal gowth ate of poplation in China has declined fo nealy thee decades, with a yealy inceased poplation fom moe than 17 million in the mid- 1980s deceasing to less than 7 million in ecent yeas. Meanwhile, the continos edction in hosehold size apidly inceases in the total nmbe of hoseholds. Even if the poplation stops gowing, the nmbe of hoseholds will incease fo some time. Consideing that the stict family planning policy in China has aleady been elaxed to some extent, poplation gowth will contine to inflence China s cabon emissions fo one o two decades. Accoding to o appoach, with othe things being eqal, the impacts of poplation change on emission gowth in China will mainly depend on the tadeoff between the effects of the inceasing nmbe of hoseholds and the deceasing level of aveage hosehold size. Howeve, sch dependence does not necessaily mean that the gowth in poplation acceleates emissions gowth. As o eslts sggest, the positive effect of moe poplation in the nea fte might not be an isse at all, assming less consmption gowth pe capita, less income saved fo fte consmption, and even the stonge negative effect of cabon intensity that might eslt fom the ambitios national taget on emissions edction (UNFCCC, 2010)

20 In the past thee decades, the invesed consmption GDP atio of China has makedly flctated pwad, indicating that China has saved a lage shae of income fo fte consmption. This obsevation is sppoted by the expot-oiented indstial stcte and the lage-scale investments dominated by the govenment. The positive effects of the invesed consmption GDP atio ding this peiod indicate that the inceased shaes of expot and investment in China s economy have diven the gowth of emissions. Howeve, it is impossible to always save fo the fte withot spending and the sitation cold not contine foeve. Changes may happen in the nea fte given changes in the wold economy that may edce expots fom China. Fthemoe, the investments dominated by the govenment have been so stong that it becomes difficlt to invest moe in the economy in the nea fte. China has noticed this sitation and has aleady stated to encoage domestic consmption by vaios policies and meases. Conceivably, China might become a net impote in the fte, meaning edction of domestic emissions and thei eplacement with emissions embodied in the impoted podcts. Hence, we wold expect that geate shae of GDP will be sed fo cent consmption. The invesed consmption-gdp atio will decease in the nea fte and its effects on emission gowth will decline gadally, even possibly be negative instead of positive Moeove, consmption pe capita might gow at a lowe ate and contibte less to the emission gowth in the nea fte. As mentioned above, net expots and investments may not necessaily seve as the key dives of the economic gowth any moe. At the same time, domestic consmption is difficlt to speed p in the shot 19

21 tem since a thoogh all-inclsive social secity system has not yet been established, and the pefeences of consmes may not change damatically ovenight when they have to face the ncetain isks of illness, nemployment and high hosing pices. In addition, China is expeiencing fast and pofond poplation ageing with apidly declining fetility and inceasing life expectancy. Both the size and shae of the woking-age poplation have decline since 2012, indicating that the window of oppotnity fo China s demogaphic bons is closing. These obsevations all sggest a possible lowe economic gowth ate in the nea fte Petes et al. (2007) have conclded that the cabon emission gowth is a ace between inceasing consmption and technology o efficiency gains since othe deteminants ae elatively stable ove the peiod. In this context, consmption is epesented by GDP, which is the podct of consmption and the invesed consmption-gdp atio in o analysis. Hence, the contibtion of consmption in o analysis shold be less than those in Petes et al. (2007). Consmption pe capita in o analysis contibtes to emission gowth at almost the same ate as the total obseved emission gowth. This allows s to say that the effects of technology epesented by cabon intensity ae almost cancelled ot by effects of poplation gowth and the tadeoff between cent and fte consmption epesented by the invesed consmption-gdp atio. With less income saved fo fte consmption and bette technology expected, thee wold be moe oom fo poplation gowth povided emission gowth is copled with changing consmption pe capita. 20

22 The change in cabon intensity exets a significantly negative effect on emission gowth ding this peiod. It is natally deemed one of the most citical points in tems of enegy consevation and emission edction. The contibtions of cabon intensity eqal the sm of the effects of both enegy intensity and the cabon emission facto. Theefoe, two main appoaches ae geneally sed to edce cabon intensity: one is to edce enegy intensity by pomoting technological pogess and inceasing enegy efficiency and the othe is to edce the cabon emission facto by impoving the enegy mix. Howeve, we shold not ovelook that indsty-wide cabon intensity can also be edced by adjsting the economic stcte. To check whethe o eslts ae stongly inflenced by the assmptions we have made in this stdy, we condct some sensitivity analyses to test the significance of the assmption. The ncetainty of o findings might be associated with the assmption on the links between GDP and hosehold consmption. As mentioned above, we sed the invesed consmption-gdp atio to indicate oghly the tade-off between cent and fte consmption made by hoseholds at the aggegate level, assming all the income coesponding to the govenmental expendite to be fte consmption. Howeve, the invese consmption-gdp atio might ndeestimate cent hosehold consmption de to ovelooking the pat of the govenment income sed fo cent consmption. To test the sensitivity of this assmption, we conside an exteme case whee all the govenmental expendite is teated as cent athe than fte consmption. The govenmental expendite is then allocated into hosehold consmption popotional to ban and al poplations and thei consmption 21

23 pattens ove this peiod. In the exteme case, the cmlative contibtions fom cent hosehold consmption fom 1978 to 2008 ae inceased by a fthe 3.2% of total obseved emission gowth (o 49.3 MMT cabon) compaed with that based on o oiginal assmption. Coespondingly, the cmlative contibtions fom the invesed consmption-gdp atio ae edced by the same amont of cabon emissions gowth. Hence, the deviation cased by the oiginal assmption wold be less than 3.2% of the total obseved emission gowth, which we conside is within acceptable limits, and o oiginal assmption wold not lead to a sbstantial misjdgment egading the contibtions of cabon emissions of hoseholds in China Conclsions By adopting a complete two-stage decomposition appoach, the cent stdy qantitatively illstates the contibtions hoseholds to the gowth in cabon emissions in China. The gowth of cabon emissions fom fossil fels is decomposed to conside the effects of five impact factos, i.e., the nmbe of hoseholds, hosehold size, pe capita consmption, invesed consmption GDP atio, and cabon intensity. The effect of each these impact factos is then boken down to conside the inflence of ban and al hoseholds. O key eslts ae as follows: (1) Fom 1978 to 2008, nealy 60% of emission gowth can be attibted to the inceasing nmbe of hoseholds and the othe 40% de to inceasing emissions pe hosehold. 22

24 (2) Decomposition of emissions pe hosehold sggests that edced hosehold size deceases emissions by less than 20%. (3) The contibtion ban hoseholds to emission gowth is six times that of al hoseholds. (4) The cmlative contibtions fom the invesed consmption GDP atio incease and achieve 23% of the total obseved emission gowth in (5) Consmption pe capita contibtes to emission gowth by almost the same amont as the total obseved emission gowth. (6) The cmlative effects of cabon intensity eslt in edcing nealy 70% of total obseved cmlative emission gowth Some of the possible policy implications of these eslts have been discssed. We point ot that ban hoseholds shold take the majo esponsibility fo emission abatement in the fte de to thei dominant histoical contibtions to emission gowth. Meanwhile, the basic ight to svival and development of al hoseholds has to be espected and potected. The pinciple of Common bt Diffeentiated Responsibility can be extended to the hosehold level by, fo instance, taking ban hoseholds as developed conties and al hoseholds as developing conties. We also point ot that the effect of family planning policy on emissions is ncetain given the high intedependence between the key deteminants of emissions. Hence, the elaxation of the family planning policy may not eslt in moe emissions, bt this 528 is not clea. 23

25 The policies to encoage domestic consmption in China can incease the shae of GDP fo cent consmption and lowe domestic emissions gowth in the nea fte since less investment, less expots and moe impot ae expected. In the nea fte, inceasing consmption pe capita may contibte less to emissions gowth given slowe economic gowth in the est of the wold and the challenges of economic stctal change in China. The ambitios national taget on emissions edction (UNFCCC, 2010) may keep cabon intensity continosly as the key dive of emission abatement Acknowledgments This stdy was sppoted by the Reseach Concil of Noway (gant /E20) and the National Natal Science Fondation of China (gant ). The final vesion was completed ding Zh Qin s visit at CICERO sppoted by China Scholaship Concil and the Reseach Concil of Noway (gant /E10). Zh Qin is also gatefl fo the financial sppot fom the Hmanities and Social Sciences Poject of Ministy of Edcation of China (No. 11YJCZH260), and the Fndamental Reseach Fnds fo the Cental Univesities of China Appendix. The decomposition appoach We stat o two-stage decomposition appoach fom the IPAT model, which can be expessed by C t = P t A t T t, (1) 24

26 whee t denotes a yea between 1978 and 2008, C t the annal national cabon emissions to eplace the impact on the envionment (I) in IPAT, P t the poplation size, A t pe capita GDP, and T t cabon intensity defined as cabon emissions pe nit GDP. Based on the IPAT identity, we develop o decomposition model as follows. P in IPAT is eplaced by two demogaphic factos: nmbe of hoseholds (N t N t ) and hosehold size ( S t 0 0 S t ) in ode to focs on the impacts of hoseholds instead of poplation. In the two expessions above and expessions below, the spescipt indicates ban hoseholds and al hoseholds. Notice that the invesed hosehold size has been inclded as a deteminant (Minx et al., 2011). Howeve, in o opinion, if less poplation in a conty implies less emissions, which is widely accepted, it is not plasible to assme less membes of a hosehold (hosehold size), on the contay, imply moe emissions in the same context. The A in IPAT epesented by GDP is decomposed to be two tems: (1) Residential consmption (epesented by expendite) pe capita in ban e = E P and al aea( ), whee E is total consmption of ban hoseholds e = E P and E total consmption of al hoseholds. This tem captes diffeent consmption levels between al and ban hoseholds. (2) The invese of consmption-gdp atio R = GDP, whee E is total E hoseholds consmption, i.e., the sm of consmption of both al and ban hoseholds. If GDP is taken as a poxy of total income of all hoseholds 25

27 epesented by the conty, this tem captes the diffeence between cent consmption and savings fo fte consmption. In othe wods, if a conty is taken as a epesentative consme, the highe the atio (R) implies the moe income saved fo fte consmption. In this sense, this atio can be taken as a patience indicato fo fte consmption. We still keep T as the cabon intensity, epesenting a genealized concept of technology, inclding at least thee deteminants: the enegy consmption level pe nit otpt, the enegy mix, and the associated emissions pe nit enegy. Notice that we do not distingish al hoseholds fom ban hoseholds fo the invesed consmption-gdp atio. This implicitly assmes the same saving ate fo both al and ban hoseholds. The assmption may lead to oveestimate the contibtions of al hoseholds if they have a highe saving ate. In addition, the assmption of the same cabon intensity (T) fo both types of hoseholds may also lead to oveestimated contibtions of al hoseholds since they se less fossil fels and have a lowe emissions intensity, which can be defined as cabon emissions pe nit income of a hosehold. Hence, the IPAT identity is modified to become: C t = (N t N t ) ( S t 0 0 S ) ( e t t e ) R t T t. t (2) This eqation can be ewitten as the sm of two tems: one is elated to ban hoseholds 26

28 C t = N t S t e t R t T t. (3) 590 and the othe is elated to al hoseholds C t = N t S t e t R t T t. (4) At the fist stage, the logaithmic mean Divisia index (LMDI) decomposition appoach is adopted fo both tems espectively to obtain the effect of each deteminant fom one yea t to the next yea t+1. We sm p to obtain effects on emission gowth of al and ban hoseholds espectively. At the second stage, we sm p the effects of the same deteminants to obtain the effects of the six deteminants on the ight hand side of Eq. (2). In the fist stage of the decomposition, we obtain 1. Effect of the nmbe of hoseholds Ral C n = C t+1 lnc t+1 Uban C n = C t+1 lnc t+1 C t lnc ln N t+1 t N (5) t C t lnc ln N t+1 t N (6) t Effect of hosehold size Ral C s = C t+1 lnc t+1 Uban C s = C t+1 lnc t+1 C t lnc ln S t+1 t S (7) t C t lnc ln S t+1 t S (8) t Effect of pe capita consmption 27

29 Ral C e = C t+1 lnc t+1 Uban C e = C t+1 lnc t+1 C t lnc ln e t+1 t e (9) t C t lnc ln e t+1 t e (10) t Effect of the invesed consmption-gdp atio Ral C R = C t+1 lnc t+1 Uban C R = C t+1 lnc t+1 C t lnc ln R t+1 (11) t R t C t lnc ln R t+1 (12) t R t Effect of cabon intensity Ral C T = C t+1 lnc t+1 Uban C T = C t+1 lnc t+1 C t lnc ln T t+1 (13) t T t C t lnc ln T t+1 (14) t T t 603 Hence, total changes in cabon emissions ae the sm of the above five tems: Ral C = C n + C s + C e + C R + C T (15) Uban C = C n + C s + C e + C R + CT (16) In the second stage of decomposition, we sm p acoss hoseholds to get effects on emission gowth of total and each deteminant fo all hoseholds. In addition, to sm p fo each deteminant ove time, we obtain cmlative effects on emission gowth of the deteminant. We can also sm the effects acoss deteminants p to effect of an aggegated deteminant. Fo instance, the contibtions of emissions pe hoseholds 28

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32 MMT cabon Volme indices (1978 = 1) 680 Figes C P A T Fige 1. Development paths of cabon emissions (C) and key deteminants (P: poplation size; A: pe capita GDP; T: cabon intensity) compaed with al Uban Fige 2. Cmlative contibtions to cabon emission gowth of hoseholds 31

33 MMT cabon MMT cabon Nmbe of hoseholds emissions pe hosehold Nmbe of ban hoseholds emissions pe ban hosehold Fige 3. Cmlative contibtions to emission gowth attibted to the nmbe of hoseholds and emissions pe hosehold Uban Ral Fige 4. Cmlative contibtions to emission gowth de to hosehold size 32

34 MMT cabon MMT cabon Uban Ral Fige 5. Cmlative emission gowth de to consmption pe capita Invesed consmption-gdp atio Cabon intensity Fige 6. Cmlative contibtions to emission gowth attibted to the invese of consmption-gdp atio and cabon intensity 33