Input-Output and Emission Reduction in China

1. the Input-Output and Emission Reduction in ChinaZhang Yaxiong 张亚雄Dept. of Economic Forecasting, State Information CenterNo.58 Sanlihe Road, Beijing, P.R.China 100045国家信息中心经济预测部100045北京市西城区三里河路58号 Email: zhangyx@mx.cei.gov.cn

2. Contents • The IOT compilation in China • The applications in climate change study in SIC • Estimation of China’s net export emission • Sectoral competitiveness impacts of carbon pricing policy • China’s carbon intensity target provincial dis-aggregation • Summary

3. China’s National and provincial level Input-Output tables the NBS national and provincial IO tables the SIC national IO tables competitive import type tables

4. China’s Multi-provincial IO (CMPIO) models • SIC’s first development work: 1997 China’s 8-region, 30-sector multi-regional IO model (SIC, 2005) • The features of the 2002 and 2007 CMPIO • the entire development work is based on 30 provinces (municipalities, autonomous regions), various regional versions of MRIO model can be made after aggregating different province groups • estimation of interregional trade coefficients: we propose specific model based on entropy maximizing and gravity models • in cooperation with Department of National Accounts of National Bureau of Statistics (NBS), we modify interregional transaction matrix, adopting the basic survey data reflecting inter-province inflow and outflow in “National Input-Output Survey 2007” • when conducting balance adjustment, each province’s table are fully used in total control that the sum of all provinces’ tables equals to national table

5. Estimating the Net Export Emission Between China and European Union，United States, Japan in 2007 • Background • Strong inter-relationship between climate change and external trade • Within the fast growth of energy consumption and CO2 emission in China, a big part of that is for the export production • Emission data is based on production side, while not take into account trade • Embodied energy：the direct energy consumption within one industry (commodity) plus all indirect energy consumption within its intermediate inputs • Embodied emissions: the carbon emissions during the embodied energy using • Net export emission = export embodied carbon emissions – import embodied carbon emissions

6. Estimating the Net Export Emission Between China and European Union，United States, Japan in 2007

7. Estimating the Net Export Emission Between China and European Union，United States, Japan in 2007 The adjustment of the CO2 emission from production side to consumption side （100 millions tons） Production side emission data from EIA

8. Estimating the Net Export Emission Between China and European Union，United States, Japan in 2007 China’s export share and emission share by 20 Industries

9. Sectoral competitiveness impacts of carbon pricing policy 20$/tCO2 on US economy (CS report: Grubb et al., 2009) 20 euro/tCO2 on UK economy (CS report: Hourcade et al., 2007) 20 euro/tCO2 on German economy (CS) 20$/tCO2 in Japan (CS: Grubb, 2009)

10. Sectoral competitiveness impacts of carbon pricing policy China’s sectoral competitiveness impact (100yuan/tCO2, roughly 11-12 euro/tCO2)

11. Sectoral competitiveness impacts of carbon pricing policy • Sectors affected: • Electricity: depending on whether pass-through can be made • Iron&steel, aluminum, chemicals, etc.: need further sub-sectoral studies for making necessary compensatory measures • Choice of carbon price • Low start rate is safety in terms of competitiveness and macro impacts • High start rate would need careful designs on revenue use/compensatory measures, etc. • Forms of carbon price • ETS on industry and electricity; CT on household and transport? • International Aspect • Carbon leakage if low start CP at domestic • Possibility of introducing short-term (comparable) explicit CP into export?

12. China’s carbon intensity target provincial dis-aggregation • It should be considered together on how to dis-aggregate the target and how to achieve the target, and the principle is to link the equity and efficiency together • If there is no carbon market: the target dis-aggregation should base on efficiency, while to achieve the equity through transfer payment and other policy tools during the implementation • If there exists the carbon market: the target dis-aggregation should base on equity, while to achieve efficiency through the market

13. China’s carbon intensity target provincial dis-aggregation EU Kyoto targets under burden sharing arrangement, compared to actual change in emissions

14. 遵循效率原则的目标分解结果Target dis-aggregation method based on cost minimization 主要结论1：减排目标较大的省份主要集中在西部和东北等区域 Result 1: the higher target provinces are mainly in the western and northeastern regions 主要结论2：不同地区完成减排目标的方式不同，发达省份更多地依靠经济发展方式转型；而欠发达地区则将主要依赖未来的专门减排政策 Result 2: advanced provinces tend to rely on the successful transfer of economic development pattern, while under development provinces need additional particular mitigation policies

15. 遵循效率原则的碳强度目标分解方法Target dis-aggregation method based on cost minimization Carbon intensity A BAU B Target 2020 2005 T A：存在于BAU（Business As Usual）情景中。主要体现了各省所处的经济社会发展阶段、资源禀赋变化、能源生产效率改进等 the BAU scenario reflects growth trend, technique efficiency, resource endowment, etc. B：通过额外减排努力实现的减排幅度。需要各省在未来采取专门的减排政策，因此需要付出额外的减排成本。这些措施包括“上大压小”等行政手段，以及碳税、可再生能源补贴基金等经济手段。 To achieve B needs new policy and pay additional cost • 效率原则：遵循减排成本最小化原理开展碳强度目标分解。如果各省在完成其减排目标时，所做出额外减排努力的边际减排成本相等，那么全国的减排总成本将实现最小 • The carbon intensity target could be separated into 2 parts, where A is the provincialcarbonintensity change within BAUscenario, B is the one which need additional efforts to achieve. It will induce additional cost. The total cost will be minimized if the marginal abatement costs (MAC) for each provinces are equal

16. 通过额外努力实现的目标分解方法 Additional reduction potential estimation • 基本思路：测算各省的技术减排潜力。潜力越大的省份，以较低成本完成的减排机会越多，因此应分得的减排目标就越多 • If the MAC is lower, the additional reduction potential by technology improvement will be bigger. Thus the provincial target B will be larger • 各省的技术减排潜力: 该省各行业技术减排潜力的加权之和。某省某行业的技术减排潜力表示为其单位增加值排放量与全国先进水平之差。差距越大，表明该省该行业的现有技术越落后，其减排潜力也越大 • Provincial reduction potential by technology improvement: it is the weighted sum of each industry’s reduction potential by technology improvement, which defined as the difference of CO2 emission per Value added with domestic advanced level

17. Summary • IOT • Trade • Competitiveness • Climate change • Emission reduction • ETS

18. Thank you！