Spatial Spillover Effects In Determining China's Regional CO2 Emissions Growth

As the world's second largest economy, China's carbon emission accounts for 30% of global GHG (BP,2015). On one hand, China's current massive amount of CO2 emissions comes from its accumulatively rapid growth; on the other hand, China's national emission level is simply from the aggregation of domestic regional emissions, understanding the determinants of China's regional emissions growth is crucial for both achieving the national emission reduction targets (regional governments are the direct executive body in charge) and balanced regional environmental governance concerning a narrow definition of "carbon leakage" through domestic-interregional trade, and relevant development consensus about the responsibility sharing between developed and developing regions inside China.This paper proposes an alternative input-output based spatial-structural decomposition analysis to elucidate the importance of domestic-regional heterogeneity and interregional spillover effects in determining China's regional CO2 emission growth. IRIO-SDA vividly illustrates how intraregional and interregional production technology change, domestic final demand scale, structure, preference change, exports scale, preference change, and intraregional carbon intensity change affect regional emissions growth. And the spatial spillover effect via domestic supply chains is separated into "efficiency improvement effect" "emission transfer effect" "emission concertation effect" "emission diffusion effect".Our empirical results based on the 2007 and 2010 Chinese interregional input-output tables show that, the changes in most regions' final demand scale, final expenditure structure and export scale give positive spatial spillover effects on other regions' CO2 emission growth, the changes in most regions' consumption and export preference help the reduction of other regions' CO2 emissions, the changes in production technology, and investment preference may give positive or negative impacts on other region's CO2 emission growth through domestic supply chains. For example, production technology change and consumption preference change in North East, North Coast, North West show "emission concertation effect"; production technology change and consumption preference change, exports preference change in East Coast and South Coast show "efficiency improvement effect"; production technology change and investment preference change in Central show "emission concertation effect". Central has become the center in receiving emission diffusion effect, followed by West Areas.Spatial SDA at regional sector level shows that, except for negative effect from carbon intensity change, negative or positive effect (in Central and West Area) from production technology change, positive effect from final demand scale, structure change on regional emissions growth, there are additional heterogeneous effect among sectors. For example, carbon intensity change even increases emissions in metal products sector in Central and West Area, and has limited effect on carbon reduction in other regions; production technology change, final demand structure and investment preference change increased emission in non-metallic sector; for commerce and transportation sector, positive effect from carbon intensity change even outweigh final demand scale effect, as the main driving force for emissions growth. Exports scale and structure effect induces emissions growth mostly in chemical sector, followed by metal product sector in North Coast and Central, commerce and transport sector in Central and West. Spatial spillover effect shows production technology change in South Coast and East Coast as "efficiency improvement effect", production technology change in North Coast as "emission diffusion effect"(especially in in chemical and non-metallic sector) and "emission transfer effect" (in metal products, electricity, water production and supply). For commerce and transportation sector, final demand change in North Coast show significant "emissions diffusion effect"Considering the fact that regional emissions reduction depends not only on its own effort, but also on interregional spillover effect via domestic supply chains, the above analysis can significantly help better and deeper understanding on the driving forces via domestic supply chains behind the growth of regional CO2 emissions, thus can enrich the policy implication concerning a narrow definition of "carbon leakage" through domestic-interregional trade, and relevant political consensus about the responsibility sharing between developed and developing regions inside China.