Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: Experimentalist Governance for Low-Carbon Development Strategy: Evaluation of a Quasi-Experiment Pilot Scheme in China

Thursday, November 12, 2015 : 3:30 PM
Board Room (Hyatt Regency Miami)

*Names in bold indicate Presenter

Xufeng Zhu and Ruixiang Xie, Tsinghua University
This paper evaluates the effects of the distinctive experimentalist governance for low-carbon development strategy adopted by China. The high-speed economic development in China has brought large-scale investments in energy-intensive industries, resulting carbon-intensive production ratio in the total economy increasing significantly. In 2010, The Chinese National Development and Reform Commission (NDRC) launched the first round Low-Carbon Provinces and Cities (LCPC) pilot schemes to fulfill the national commitment to cut carbon intensity 40 -45% by 2020 compared with the level in 2005. Did the low-carbon pilot provinces selected by the NDRC have better performance in carbon intensity than non-pilot provinces? The aim of this study is to evaluate the carbon intensity reduction by industry sectors in those pilot provinces and to show the effects of experimentalist governance for China’s low-carbon strategy.

Theoretically, two main strategies can be adopted to reduce carbon intensity. From the microscopic aspect, reducing the emissions per units output in each economic sector can be achieved through low-carbon technology diffusion and scale economy. On the macroscopic aspect, carbon intensity can be reduced by adjusting industrial structure and moving to a low-carbon economy development model. Therefore, this paper first uses decomposition analysis to understand the functions of two strategies (sectoral carbon efficiency and production structure) to improve carbon intensity at the provincial level, and changes of regional carbon intensity among pilot provinces and non-pilot provinces can be calculated.

Second, we examine the performance of LCPC on carbon intensity by using difference-in-differences model based on panel data among 25 Regions (7 pilot provinces and 18 non-pilot provinces) between 2005 and 2013 with 10125 observations (25 provinces×45 economic sectors×9 years), to understand the changes and driving factors of carbon intensity that related to low-carbon development performance both in pilot provinces and non-pilot provinces. Because pilot provinces and non-pilot provinces are balanced on observable characteristics, the LCPC can be treated as a quasi-experiment to avoid selective bias.

Preliminary evaluating results reveal that pilot provinces are significantly better than non-pilot provinces both in sectoral carbon efficiency effects and production structure technical effect. Although sectoral carbon efficiency which brought by technologies or scale economy was improved in most of provinces (especially in the pilot provinces), the improvements were counter-balanced by the carbonizing production structures.

We suggest that more emphasis should be placed on green innovations rather than deindustrialization within industries, and experimentalist governance in the China’s LCPC pilot scheme may not only be an effective way to cut regional carbon intensity for adjusting China’s low carbon strategy, but also offer important lessons for the rest of the world, particularly countries with diversified local situations and those in the initial phase of low-carbon development.