Dissertation
Dissertation > Economic > Economic planning and management > Management of National Economy > Management of resources,environment and ecology

The Relationship between China’s Carbon Emissions and Energy Consumption with Economic Growth

Author ZhaoAiWen
Tutor LiDong
School Nanjing University of Aeronautics and Astronautics
Course Management Science and Engineering
Keywords carbon emissions energy consumption economic growth
CLC F205
Type PhD thesis
Year 2012
Downloads 150
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The issue regarding carbon emissions and energy consumption in China has drawn a lot ofworld-wide attention. Currently, China’s economic structure is mainly characterized by high energyconsumption and high carbon emission, which is recognized as a heavy industrial structure and resultsin emergence of high-energy-consumption tendency and carbon preference accordingly. As wellknown, China’s economic development has been suffering from a variety of constraints, such asclimatic conditions, environmental depletion and energy constraints, of which the most criticalbottleneck is the energy-related problem. On the one hand, the unreasonable energy consumption hasbeen generating more and more negative impact on China’s economic health growth. On the otherhand, the nation has also witnessed a sharp increase in carbon emissions caused by energyconsumption. According to certain published statistics, China’s per capita carbon dioxide emissionsare No.73in the global listing while the total emissions volume has been ranked the forefront.In response to the increasingly serious problems of energy constraints and environmental pollutionduring China’s economic process, the Chinese government proposed at the United Nations Summit onClimate Change held in September2009that, by2020, the carbon emission intensity per unit of GDPwould be declined by40%-45%in comparison with that in2005. Meanwhile, the nation firstly raisedin the "12th Five-Year Plan Outline" that during the "12th Five-Year" period, the total one-time energyconsumption would be controlled within4.1billion tons of standard coal, and that the energy intensityand the carbon emission intensity per unit of GDP would decrease by16%and17%respectively, bothinvolved in the long-term planning of national economic development as binding targets. The fact thatthe Carbon emissions and energy consumption are linked to the economic growth indicates that thesethree aspects are the same emphasis. It is a grim problem faced by the Chinese government as to howto reduce energy consumption and carbon emissions while ensuring its economic growth. In this paper,the relationship between carbon emissions, energy consumption and economic growth is analyzed indepth using theoretical models and empirical research.The grey relational analysis is conducted both between the carbon emissions with economicgrowth energy consumption and between the energy consumption with economic growth followed bythe result showing that the carbon emissions and energy consumption are positively correlated witheconomic development. Considering the five-year plan for2011to2015as well as emission reductiontarget by2020, the author further develops the China’s total energy consumption and energyconsumption structure prediction models with unconstrained programming and constrainedprogramming, and then predicts the national total carbon emissions with these two different conditions, respectively.The LMDI factor decomposition analysis is applied to explore the influencing factors related withcarbon emissions and energy consumption, which turns out that the factor of economic growth is thedriver contributed to increase in carbon emissions and energy consumption while energy decline is themain reason why carbon emissions and energy consumption are prevented. To begin with, factordecomposition analysis is carried out on energy intensity-a critical element for reducing carbonemission and energy consumption, and an energy intensity extension model is built in accordancewith the energy intensity factor decomposition. Next, analysis is made as to how every variabledisproportionately affects the energy intensity via the stochastic model. Finally, a regression equationconcerning the main influence factors of energy intensity is built based on optimum subset regression,which leads to the conclusion that the main factor affecting energy intensity is industrial energyintensity, followed by the industrial structure and energy intensity of the tertiary industry in sequentialorder.Besides, this paper discusses the long-run equilibrium relationship and the short-term dynamicrelationship between carbon emissions and economic growth and between energy consumption andeconomic growth respectively using Co-integration theory, error correction model and Grangercausality analysis. The Granger causality analysis indicates a mutual cause-and-effect relationshipbetween the carbon emissions and energy consumption with economic growth. Additionally, carbonemissions, energy consumption and economic growth are integrated into a unified framework throughthe establishment of the VAR and VEC model, and the dynamic characteristics of the model is furtherdefined through the impulse function and variance decomposition analysis. Note that, the impulsefunction presents a mirror symmetry phenomenon, implying that China’s economic development hasalmost the same influence path of carbon emissions and as that of energy consumption.Furthermore, the EKC curve study is employed to focus on the aforementioned relations and toexplore whether there exists any inflection point in the curve. As the simulation results show, thereexist: the N-type EKC curve without any inflection point among that carbon emissions, carbonemissions per capita and GDP per capita; the N-type EKC curve with inflection points between thecarbon emission intensity and GDP per capita; the N-type EKC curve without any inflection pointbetween the total energy consumption, energy consumption per capita and GDP per capita; the N-typeEKC curve with inflection points between the energy intensity and GDP per capita.Then the relationship of carbon emissions and economic growth and of energy consumption andeconomic development are investigated deeply using the Tapio decoupling indicators and theirextended models together with factors decomposition of decoupling elasticity. The result shows weak decoupling relationship between the two pairs mentioned above. At the same time the introduction ofintermediate variables of the logical relationship further explains the decoupling relationship betweencarbon emissions, energy consumption and economic growth, verifying very similar change trend ofdecoupling elasticity with approximately equal elasticity values between the two pairs’ relationship. Inconclusion, the decoupling relationship elasticity between China’s carbon emissions and economicgrowth is directly caused by that between energy consumption and economic growth.According to the study, some countermeasures are suggested as to how to control the total energy,to effectively reduce energy intensity, optimize the industrial structure and to vigorously develop newenergies.

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