Coupling Structural Decomposition Analysis and Sensitivity Analysis to Investigate CO2 Emission Intensity in China

A coupled structural decomposition analysis (SDA) and sensitivity analysis approach is developed to explore the drivers of China's CO2 emission intensity at both general and sectoral levels and from both ex-post and ex-ante perspectives. Two steps are involved-structural decomposition and sensitivity analysis. First, the popular factor decomposition method, SDA, is implemented to identify which drivers have made the largest contribution to emission intensity changes. Second, an emerging ex-ante approach, sensitivity analysis, is introduced to answer how and to what extent such drivers will influence future emission intensity at a sectoral level. Based on China's input-output tables for 1997-2012, the empirical study provides a hotspot map of China's energy system. (1) Direct-emission coefficient and technology coefficient are observed as the top two overall drivers. (2) For the former, reducing direct-emission coefficient in an emission-intensity sector (e.g., electricity and heat sectors) by 1% will mitigate China's total emission intensity by at least 0.05%. (3) For the latter, future emission intensity is super-sensitive to direct transactions in emission-intensity sectors (particularly the chemical industry with elasticities up to 0.82%).