New Horizons in Environmental Economics series
INTRODUCTION The world’s most populous country and largest coal producer and consumer, China contributed 12.9 percent of global CO2 emissions in the year 2000, making it the world’s second-largest emitter of CO2 (IEA, 2002). Previous studies have suggested that China’s energy consumption and CO2 emissions will continue to rise during the next five decades (for example, Ho et al., 1998; Yang et al., 1998; IPCC, 2000; EIA, 2002). CO2 emissions increased steadily between 1971 and 1996, but contrary to forecasts, they began to decrease thereafter. Figure 10.1 shows recent estimates by the International Energy Agency (IEA, 2002) and the US Energy Information Administration (EIA, 2002). We also estimated CO2 emissions based on the China energy balance tables from 1980 to 1999 (NBS, 1990a, 1996a, 2000a) following the methodology suggested by the IPCC 1996 Guideline (IPCC/OECD/IEA, 1997). All the above estimates indicate that China’s energy-related CO2 emissions experienced a declining trend from 1996 to 2000. This raises a series of questions: What happened during this period? How did underlying forces contribute to the changes in CO2 emissions? Do the changes represent only a temporary fluctuation or a long-term trend? Since fossil fuel combustion is responsible for three-quarters of anthropogenic CO2 emissions in China (Streets et al., 2001), changes in energy consumption and production are expected to directly influence CO2 emissions. As shown in Figure 10.2, the decline in CO2 emissions is a direct result of the decline in energy consumption and production. This decline occurred despite a persistently high growth rate...
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