Tracking carbon intensity changes between China and Japan: Based on the decomposition technique

China's economic growth has been progressively moving towards reducing carbon intensity. In parallel, Japan has long been regarded as the pioneer of energy efficiency worldwide. Why have these two economic giants had such different experiences of carbon intensity in the past decades? A closer examination in both countries may hold vital clues, which are still very unclear. This paper compares the patterns of carbon intensity between China and Japan, in which we propose a bilateral-country decomposition framework by combining production theoretical decomposition analysis and index decomposition analysis. The decomposition highlights the effects of emission factor, energy structure, sectoral structure, substitution among labor-energy and capital-energy, and technological progress. The results show that the energy structure, sectoral structure, and capital-energy substitution are the main drivers behind that China is much higher carbon intensity than Japan, accounting for 26%, 25%, and 38%, respectively. Yet, these effects also narrowed the carbon intensity gap between China and Japan over the years. Furthermore, the labor-energy substitution effect has generally decreased the carbon intensity gap. The technological effect has a minor impact on the carbon intensity gap per year, while it plays a dominant role in enlarging the carbon intensity gap over time.