A Study On The Impact Of Biased Technological Progress On China's Industrial Carbon Intensity

Since the beginning of the21th Century, addressing climate change has become a crucial issue that attracts global focus. Controlling the greenhouse gases emission, as a consequence, has been a general trend. China has made a commitment that its CO2emissions per GDP (carbon intensity) will decrease40%-45%in2020compared to the2005level, and during its "12th Five Year Plan" Period, the goal is to decrease17%. Industry sector is the main CO2emitter in China, and also the key sector to ensure China's emission reduction goal. At the same time, technological progress has always played an important role in lowering the industrial carbon intensity. However, among the existing literatures, few of them reveal the micro mechanism of the impact of technological progress on China's carbon intensity. Industrial carbon emission is mainly from energy consumption, while energy, at first should be treated as an input factor of production. As a result, the mechanism for technological progress to decrease the industrial carbon intensity is closely relevant to its features in the usage of energy factor. Biased technological change referes to the situation that technological progress changes the relative marginal productivity, thus changes the relative use of different factors unproportionally. Therefore, to disentangle this mechanism and study the impact of technological progress to carbon intensity has great importance in enhancing China's carbon productivity and decreasing its carbon intensity.Nowadays, the carbon emission in China's industry is still growing, and highly concentrated in high emissions sectors whose emissions are beyond100million tons. The carbon intensity and energy share of these sectors are also significantly higher than that in the middle and low emissions sectors. Meanwhile, among different sources of technological progress, the mean value of FDI's horizontal and forward spillovers, import and export spillovers are all higher in the middle and low emissions groups, the only exception is R&D. This phenomenon reflects that technology has the feature of biasly changing the factor ratio. Thus, this dissertation is aiming at discussing the biased technological progress, as well as its inducement and sources, and its impact on China's industrial carbon intensity. Four main related issues have been studied:Firstly, the dissertaion has identified the bias/direction of technological progress in China's industry. Under a framework which takes energy input into consideration, the study applied DEA method to calculate the IBTECH index which represents the biased technological progress in36China's industrial sectors during1999-2011. The result shows that, biased technological progress has augment productivity in most sectors; the bias/direction of technological progress is saving energy between energy and capital, saving labor between energy and labor, and saving energy between energy and intermediates. Energy-saving technological progress has been enhanced during the time trend.Secondly, the dissertaion calculated out the contribution and net effect of biased technological progress in lowering China's industrial carbon intensity. DEA decomposition shows that biased technological progress has contributed2%of carbon intensity decrease every year, and the contribution ratio has rocketed up since2008. Nowadays, it has surpassed neutral technological progress to become one of the main driven forces in lowering carbon intensity. Then, after controlling the endogenous problem, the study use treatment effect model and dynamic panel data model to estimate the net impact effect of biased technological progress on energy intensity. The result shows that, if the direction of technological progress is energy-saving between energy vs. capital, labor or intermediates, the carbon intensity will lower2.05%,2.01%and4.56%respectively. If the total effect of biased technological change could enhance productivity, it would help lowering carbon intensity: a1%increase in IBTECH index can result in0.107%drop in industrial carbon intensity.Thirdly, the dissertaion has explored the price inducement mechanism of energy-saving technological progress and its impact on industrial carbon intensity. The results, which are based on empirical studies using IV-Probit model and dynamic panel data model, reveal that there's significant evidence on induced technical change (ITC). The higher energy price will induce the energy-saving technology. Keep other factors' prices constant, a1%increase in energy price will lower carbon intensity by0.461%through the ITC. Since industrial carbon emissions are mainly from energy consumption, the carbon price, which is equivalent to an adding up of energy price, can lower carbon intensity through ITC. Every unit Yuan/ton carbon price can induce energy-saving technological progress to lower carbon intensity by0.055%.Fourthly, the dissertaion screening the different sources of China's industrial technological progress, and calculate their impact on carbon intensity through biased technological change. By constructing a translog cost function including neutral and biased technological progress and apply SUR, the empirical results show that, R&D and FDI's horizontal spillover is energy-saving, import, while export, FDI's forward and backward spillover is energy-using. The influence of biased technological progress is obvious:if one source of technological progress presents strong feature of energy-saving, it could probably lower carbon intensity. R&D, FDI's horizontal and forward spillover can decrease carbon intensity, while import, export and FDI's backward spillover will increase carbon intensity.According to the research outcome, the dissertaion provides several policy suggestions around emissions abatement, technology, trade and foreign investment, in order to effectively guide the energy-saving bias of technological progress and lower carbon intensity. Policy implication includes the application of market abatement policy tools, the distinct policies in inducing different sources of biased technological progress, the promotion of low carbon R&D, technology importing and absorbing in high emissions sector, etc.