Reports
Discussion Papers
No.592 How Does Firm Heterogeneity Information Impact the Estimation of Embodied Carbon Emissions in Chinese Exports?
by Yu LIU, Bo MENG , Klaus HUBACEK, Jinjun XUE, Kuishuang FENG, Yuning GAO
March 2016
ABSTRACT
Using an augmented Chinese input–output table in which information about firm ownership and type of traded goods are explicitly reported, we show that ignoring firm heterogeneity causes embodied CO 2 emissions in Chinese exports to be overestimated by 20% at the national level, with huge differences at the sector level, for 2007. This is because different types of firm that are allocated to the same sector of the conventional Chinese input–output table vary greatly in terms of market share, production technology and carbon intensity. This overestimation of export-related carbon emissions would be even higher if it were not for the fact that 80% of CO 2 emissions embodied in exports of foreign-owned firms are, in fact, emitted by Chinese-owned firms upstream of the supply chain. The main reason is that the largest CO 2 emitter, the electricity sector located upstream in Chinese domestic supply chains, is strongly dominated by Chinese-owned firms with very high carbon intensity.
Keywords: embodied CO 2 emissions, carbon intensity, supply chains, ownership, processing trade
JEL classification: E01, F18; C67; F64, H23
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