Journal of Cleaner Production 83 (2014) 185e193

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Optimal strategies for carbon reduction at dual levels in China based

on a hybrid nonlinear grey-prediction and quota-allocation model
Xingwei Wang a, Yanpeng Cai b, c, *, Yi Xu d, Huazhang Zhao e, Jiajun Chen a
a
Key Laboratory for Water and Sediment Sciences of Ministry of Education, School of Environment, Beijing Normal University, Beijing 100875, PR China
b
State Key Joint Laboratory of Environment Simulation and Pollution Control, School of Environment, Beijing Normal University, Beijing 100875, PR China
c
Institute for Energy, Environment and Sustainable Communities, University of Regina, 120, 2 Research Drive, Regina, Saskatchewan S4S 7H9, Canada
d
Chinese Academy for Environmental Planning, Ministry of Environmental Protection, Beijing 100012, PR China
e
College of Environmental Science and Engineering, Peking University, Beijing 100871, PR China

a r t i c l e i n f o a b s t r a c t

Article history: In this research, a hybrid nonlinear grey-prediction and quota allocation model (HNGP-QAM) was
Received 18 February 2014 developed for supporting optimal planning of China's carbon intensity reduction at both departmental
Received in revised form and provincial levels in 2020. At such dual levels, HNGP-QAM can not only help forecast carbon intensity
21 May 2014
and its fluctuations over the concerned period, but also facilitate the identification of China's carbon
Accepted 4 July 2014
Available online 15 July 2014
intensity reduction target in 2020 and the corresponding quotas for minimizing the total abatement cost.
Two scenarios were developed based on multiple governmental policies and allocation schemes among
provinces and departments. The results showed that the total abatement cost would be 92.07 and
Keywords:
Carbon intensity
98.93
109, as well as 180.57 and 194.19
109 RMB (It is another shortname for China Yuan) for pro-
Grey prediction modeling vincial and departmental allocation schemes under the reduction ratios of 40 and 45%, respectively.
Quota allocation model Furthermore, the west, the east, and the central China would be allocated the emission assignments that
Marginal abatement cost would be accounting for 48.53, 28.26, and 23.21% of the total national emission reduction, respectively.
Allocation scheme The obtained results were particularly useful for multi-level governments in providing information to
identify the carbon intensity reduction target, conducting emission reduction assignments among
provinces and departments, as well as supporting relevant policy-making. The results also suggested that
the developed HNGP-QAM be applicable to similar engineering and planning problems.
© 2014 Elsevier Ltd. All rights reserved.

1. Introduction
China's energy-related CO2 emission is continuously increasing
due to the rapid industrialization and economic development. Also,
such an emission is closely linked with China's large population,
rapid economic expansion, and heavy reliance on coal, which make
China face the challenge for deep emission reduction (Tan et al.,
2010; Wang et al., 2013; Yu et al., 2013; Yuan et al., 2012; Zhang
et al., 2014; Zhang, 2011). Many efforts have been carried out in
China to reduce CO2 emissions. For instance, in November 2009, the
Chinese government announced that by 2020, China's carbon di-
oxide emissions per unit of GDP will have been reduced by 40e45%
of the 2005 level. At the national level, in order to meet this target,
* Corresponding author. State Key Joint Laboratory of Environment Simulation
and Pollution Control, School of Environment, Beijing Normal University, Beijing
100875, PR China.
E-mail address: yanpeng.cai@bnu.edu.cn (Y. Cai).
carbon emission reduction has been put a priority in the agenda of
the central government, which has been incorporated within
China's newly published report of National Economic and Social
Development. Comparatively at the provincial level, various pro-
vincial authorities have been required to reformulate their policies
to ensure satisfying the national target (Jennings et al., 2011; Wang
et al., 2011b). In order to achieve this carbon reduction target, the
central government should make clear that what emission reduc-
tion obligation should each of province and department carry out
and how to realize the emission reduction target at the minimum
total abatement cost (Jiao et al., 2013; Zhang et al., 2013; Cai et al.,
2009a). To tackle these problems, identification of carbon intensity
reduction quota at the national level and the corresponding allo-
cation quota at both of the provincial and departmental levels in
2020 is desired in China.
Previously, a number of studies were conducted on the reduction
of carbon intensity (which refers to emission amount of carbon di-
oxide for generating per unit GDP) in 2020 and the identification of
allocation schemes in China. For instance, Minjun et al. (2010) stated

http://dx.doi.org/10.1016/j.jclepro.2014.07.015
0959-6526/© 2014 Elsevier Ltd. All rights reserved.
186 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193
that it was difficult for China to realize its mitigation target under the
baseline scenario with a normal rate of technological improvement
through utilizing the computable general equilibrium (CGE) model.
This conclusion was also certified by Zheng (2013) and Yang et al.
(2013). Yi et al. (2011) developed a topedown model to allocate
the national CO2 intensity reduction target among multiple regions
based on choice preferences of regional emission reduction capac-
ities, responsibilities and potentials. Xiang et al. (2013) verified the
feasibility of achieving CO2 emission reduction target through
adjusting energy and industrial structures, and utilizing practical
measures for supporting sustainable development. The simulation
results demonstrated that China could reduce its carbon intensity by
50% in 2020 compared to 2005 with 10.27% of economic growth per
year if energy and industrial structures could be properly adjusted
(Wang and Liang, 2013). The above-mentioned methods identified a
number of possible carbon intensity reduction schemes for China in
2020, and presented a series of quota allocation strategies under
multiple scenarios. Nevertheless, few of them effectively considered
carbon abatement cost in the decision-making process of carbon
intensity reduction, which is especially important for China as a
developing country. In fact, China's carbon abatement cost has been
investigated by many researchers. For example, Zhang (1998)
compared 15 power plants in terms of both the levelized genera-
tion costs and the marginal CO2 reduction costs in China. Chen
(2005), and Wang et al. (2011a) analyzed China's marginal abate-
ment cost of carbon with the adoption of an integrated energy,
environment and economy non-linear dynamic programming
model. Choi et al. (2012) estimated the provincial marginal abate-
ment costs of CO2 emissions of China over the period of 2001e2010,
through employing a slack-based Data Envelopment Analysis (DEA)
model. The results showed that the average marginal abatement
cost of CO2 emissions in China has increased gradually from 6.94 in
2001 to 7.44 dollars/ton in 2010 (Wei et al., 2012).
Though great efforts have been carried out in the previous
studies, carbon intensity that was the key factor for achieving the
2020 carbon reduction target was generally obtained through
scenario analysis (e.g., calculating carbon intensity through
assuming multiple annual growth rates for carbon emissions and
GDP). Quantitative forecasting of carbon intensity was seldom
conducted. In fact, quantification of future carbon intensity plays a
vital role for identification of carbon intensity reduction as well as
quota allocation schemes. For instance, underestimation of carbon
intensity may probably lead to a conservative reduction target,
affecting China's international vision as a responsible country.
Comparatively, overestimation of carbon intensity may probably
result in the initiation of unreachable target, hindering China's
economic development as a developing country (Cai et al., 2009b;
Wang et al., 2013). As effective tools, methods that can forecast
carbon intensity were attractive to many researchers across the
world. For example, Behrang et al. (2011), and Pao and Tsai (2011)
investigated CO2 emission intensity with an integrated multi-
layer perception neural network and the Bees Algorithm method,
and an autoregressive integrated moving average (ARIMA) method.
Generally, these studies were individually conducted on carbon
intensity forecasting, reduction target identification, carbon
abatement cost analysis, and emission reduction scheme formula-
tion. Combination of the above-mentioned components and the
corresponding methods into a general modeling framework has
been seldom reported, which is desired for facilitating the
achievement of carbon intensity reduction target and making clear
that the emission reduction obligation for each of province and
department with consideration of the minimum total abatement
cost.
Therefore, the objective of this study is to disaggregate China's
national carbon intensity reduction target into the corresponding
optimal quota at the provincial and departmental levels. A hybrid
nonlinear grey-prediction and quota allocation model (HNGP-
QAM) will be developed for supporting the identification of carbon
intensity reduction target and the corresponding allocation of
emission reduction quota to provinces and departments in 2020.
The grey prediction modeling will be used for forecasting carbon
emission intensity at national, provincial and departmental levels.
The forecasting results will be subsequently used for help identify
the corresponding reduction target in 2020 in China. The nonlinear
quota allocation model will then be used for managing carbon
emission reduction among multiple provinces and departments.
Such two techniques will be incorporated within a general
modeling framework to achieve the minimum total abatement
cost. Optimal allocation schemes will be identified through the
developed model. The paper is organized as follows: background
information of China's carbon emission at provincial and depart-
mental level will be introduced in Part 2; in Part 3, we will present
the development of HNGP-QAM and its solution method; in Part 4
we will discusses the forecasting and the optimal allocation quota
results; and main conclusions of the research will be presented in
Part 5.
2. Overview of China's carbon emission
China has become the world's largest CO2 emitter and energy
consumer in 2009. The total CO2 emissions of China reached
7.57 billion tons, roughly accounting for 24% of the global emission
(Zhou et al., 2012). Furthermore, the total CO2 generation is
continuously increasing considering the long-term CO2-emitting
trend, which is displayed in Fig. 1. For example, CO2 emission
increased from 1.46 billion tons in 1980 to 8.72 billion tons in 2011.
The increment was nearly up to six times at an average annual
growth rate of 5.83%. Especially since 2000, China's CO2 emission
has increased at an average annual growth of 8.74%, which has been
higher than the average growth of 2.33% over the same period in
the world. During the last ten years, the cumulative CO2 emission in
China was as high as 62.8 billion tons, accounting for 21.7% of the
world's cumulative CO2 emission (Halsnæs et al., 2014). The high
emission puts great pressure on Chinese government in the inter-
national climate change mitigation initiatives (Ma et al., 2011).
Although great efforts have been made by Chinese government to
reduce CO2 emission, such as improving energy efficiency, devel-
oping and utilizing non-fossil fuels, China's CO2 emissions are ex-
pected to continue growing due to its economic growth and
urbanization (Auffhammer and Carson, 2008; Uwasu et al., 2010).
Thus, the national carbon intensity reduction target needs to be
clearly identified. However, how this target should be allocated to
the corresponding provinces/departments has not yet been deter-
mined. Furthermore, what expenses should China pay to achieve
the 2020 carbon intensity reduction target needs further analysis.
10000 Carbon emission Annual growth rate 0.2
9000
Carbon emission (10 ton)
Annual growth rate (%)
8000 0.15
6
7000
6000 0.1
5000
4000 0.05
3000
2000 0
1000
0 -0.05
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Fig. 1. The time series of national carbon emission and annual growth rate.
 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193 187

Since energy savings and CO2 mitigation potential vary greatly by 100% Living consumption
provinces/departments, it is desired to disaggregate China's na- Wholesale and retail
80%
tional carbon intensity reduction target at the provincial/depart- Transportation
mental level. Construction industry
60%
Fig. 2 displays CO2 emissions of multiple provinces in 2000 and Manufacturing
2011. A significant difference is observed on CO2 emission among 40% Primary industry
these provinces. In detail, provinces of the highest emission
20%
amounts were Liaoning (7.72%), Guangdong (6.95%), Hebei (6.66%),
Shandong (6.60%), Shanxi (6.32%) and Jiangsu (6.24%) in 2000. 0%
Those provinces are mainly located in the developed eastern

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
coastal province. Also, provinces of the lowest emission amounts
included Hainan (0.24%), Qinghai (0.48%), Ningxia (0.68%), Guangxi Fig. 3. The proportion of carbon emission in various departments during 1996e2010.
(1.56%), and Jiangxi (1.60%). Comparatively in 2011, provinces with
the highest emission amounts included Shandong (9.81%), Inner
Mongolia (6.56%), Hebei (6.51%), Jiangsu (6.31%), Shanxi (6.20%), research) was approximately 10%, indicating an upward trend. This
and Liaoning (5.87%). Comparatively, provinces of the lowest is due to the fact that rapid development of transportation makes
emission amounts included Qinghai (0.36%), Hainan (0.50%), Bei- gasoline and diesel consumptions rise sharply, which also leads to
jing (1.02%), Chongqing (1.46%), and Ningxia (1.49%). There were no the increase of CO2 emission. The unreasonable development mode
significant differences among the provinces with the highest makes it necessary to restructure the primary, secondary and ter-
emissions between 2000 and 2011 except for Inner Mongolia. The tiary industries, and increase non-energy intensive and low CO2
highest increment rates of carbon dioxide emission were Inner emitting industries to optimize energy structure and achieve the
Mongolia (3.76%), Shandong (3.22%), Shaanxi (1.15%), Ningxia government's carbon intensity reduction target.
(0.81%), and Henan (0.52%). Provinces with the most increment of
carbon emission were Shandong (815.30 million tons), Inner
Mongolia (596.99 million tons), Hebei (467.20 million tons), Jiangsu 3. Modeling formulation
(459.86 million tons), and Shanxi (445.36 million tons). It is
apparent that the characteristic of provincial carbon intensity and 3.1. Grey prediction modeling
emissions reduction potential is unbalance. China should give full
play to the advantages of resource and energy of each province to In order to identify optimal strategies for emission reduction
better complete the emission reduction target with consideration allocation, carbon intensity both at national and provincial level
of the minimum total abatement cost. This process should be needs to be determined firstly. Compared with conventional sta-
established based on the detailed investigation on the national and tistical models, grey prediction modeling is an alternative fore-
provincial carbon intensity and carbon emission to guarantee the casting tool for those systems whose structure is complex,
optimal allocation among provinces. uncertain and chaotic. It requires a limited amount of data to ac-
Fig. 3 shows historical trend of China's CO2 emissions in multiple quire behaviors of unknown systems (Zhou et al., 2006). In the
departments. Totally, CO2 generated by China's industries accoun- method, the observed time-series data can be regarded as grey
ted for over 85% of the national emission, and this value was process that is changing with time. The rule of ordered exponential
gradually increasing with the economic development. Particularly, series implicit in the system is developed via cumulative series
CO2 emission generated by the secondary industry (which involves (Deng, 1989). Among them, GM (1, 1), which is the grey prediction
processing of primary products, it refers to manufacturing and modeling with one variable and one order, has been widely used
construction industry in this research) increased quickly from 2002 across the world (Chen et al., 2010; Guo et al., 2011; Ip et al., 2009;
to 2005, representing an increasing contribution to the total na- Li et al., 2009, 2011). It can thus be adopted for forecasting carbon
tional emission. However, the total CO2 emission remained un- emission and intensity. Particularly, when forecasting successive
changed during the year 2005 due to the implementation of changes of system behaviors, GM (1, 1) could achieve high accuracy
national carbon emission reduction policies in China. The growth (Leephakpreeda, 2008).
rate of CO2 emission has slowed down since 2005. The overall Consider a time sequence x(0)(k) that can denote historical series
upward momentum is still very strong. The percentage of CO2 of electricity consumptions as follows:
emission of the tertiary industry (which provides services of
 n


o
various kinds for production and consumption, it refers to trans- xð0Þ k ¼ xð0Þ 1 ; xð0Þ 2 ; …; xð0Þ n (1)
portation, living consumption, and wholesale and retail in this
The grey differential equation is formed by an original time
series x(0)(k) using the accumulated generating operation (AGO)
technique. It can be denoted as follows:
Carbon emission (10 ton)

1200 2000 2011 0.12

Proportion in 2000 Proportion in 2011


6

1000 0.1
xð0Þ k þ azð1Þ k ¼ b (2)
800 0.08
600 0.06 The whitening equation is therefore, as follows (Kayacan et al.,
400 0.04 2010):
200 0.02  !
0 0 dxð1Þ t ð1Þ
þ ax t ¼b (3)
Inner
Liaoning

Zhejiang

Guangdong
Beijing

Shanghai

Chongqing

Qinghai
Heilongjia

Shandong
Henan

Xinjiang
Hebei

Hainan
Fujian

Hunan

Yunnan
Hubei

Guangxi

Gansu
Sichuan

Ningxia
Tianjin

Jiangsu
Anhui

Guizhou
Shaanxi

dt
Shanxi

Jiangxi
Jilin

where a is the developing coefficient, and b is the control variable.

Through the adoption of the least-square method, a and b can be
Fig. 2. The time series of national carbon emission and annual growth rate. generated as:
188 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193

 
1
a EI2020 ¼ EI2005
h (11)
¼ AT A AT Xn (4)
b
where EI2020 is the target national carbon intensity of 2020, (ton/
where 104 RMB); EI2005 is the national carbon intensity of 2005, (ton/

 104 RMB); h is the target national carbon intensity reduction ratio
2 zð1Þ 2 13 (h ¼ 40% stands for low target case; h ¼ 45% represents high target


6 zð1Þ 3 17 case).
A¼6
4
7
5 (5) The target emission reduction of 2020 can be calculated as
«
 «
follows:
zð1Þ n 1
ER2020 ¼ ðFEI2020 ðsÞ  EI2020 Þ
FGDP2020 ðsÞ (12)


2x 2 3
ð0Þ
where ER2020 is the target national emission reduction, (ton); FEI2020 is


6 xð0Þ 3 7 the national emission intensity of 2020, which is predicted based on
Xn ¼ 6
4
7
5 (6) national CO2 emission and GDP data series, (ton/104 RMB); FGDP2020 is
«

ð0Þ the national GDP of 2020 predicted based history national GDP data
x n
series (104 RMB). Moreover, the carbon intensity of 2020 at both
provincial and departmental levels can be predicted based on pro-
where z is the background values and can be calculated by: vincial and departmental CO2 emission data and the corresponding

 h

i.
 Xk
 GDP data series (China Statistics Yearbook, 1996e2012).
zð1Þ k ¼ xð1Þ k þ xð1Þ k  1 2; xð1Þ k ¼ i¼1
xð0Þ i
(7)
3.3. Development of a nonlinear carbon emission reduction quota
(1)
According to Eq. (3), the solution of x (t) at time k can be allocation model
presented as follows:
    Based on the grey prediction modeling, the national 2020 carbon
ð1Þ ð0Þ b b intensity reducing target can be identified. The objective of this study
b
x kþ1 ¼ x 1  eak þ (8)
a a is to allocate the national carbon intensity reduction target at dual
levels (i.e., among provinces and departments) through a nonlinear
Because the grey forecasting model is formulated using the data
quota allocation model. The model can formulate the problem as
of AGO rather than original data, it is necessary to transfer the data of
minimizing the total abatement cost within a number of system
AGO to actual forecasting value. This technique is called the inverse
constraints to meet the national carbon intensity reduction target.
accumulated generating operation (IAGO) and can be denoted as:
To estimate the costs of achieving carbon intensity reduction
     target, the marginal abatement cost curve need to be determined
ð0Þ b
b
x k þ 1 ¼ xð0Þ 1  eak 1  ea (9) firstly, which can be constructed by plotting CO2 prices against a
a corresponding reduction amount over a certain period in a specific
ð0Þ region (Morris et al., 2012). There are many studies in the literature
x ð1Þ ¼ xð0Þ ð1Þ.
where k ¼ 2, 3, …, n, b
on marginal abatement cost curve in different forms, such as
exponential (Gruetter, 2000), quadratic (Ellerman and Decaux,
1998), and logarithmic functions (Nordhaus, 1991; Sager, 2003;
3.2. Identification of China's carbon intensity reduction target in Zhu et al., 2012). This research adopted the logarithmic form to
2020 investigate the marginal abatement cost curve. Table 1 shows
China's emission reduction proportion and the corresponding
Since the official data on CO2 emission both at national and marginal abatement cost data in 2020, which were provided by the
provincial/departmental levels is not available in China, the fuel- Emissions Prediction and Policy Analysis Model (Morris et al., 2008;
based carbon calculation model is employed to estimate the CO2 Tao et al., 2010). The optimal logarithmic function for marginal
emission both at national and provincial/departmental levels based abatement cost curve can be obtained through customizing the
on the criteria published by the International Panel on Climate following method.
Change (IPCC) (2007) and the National Coordination Committee
Office on Climate Change and Energy Research Institute of NDRC MC ¼ a þ b
lnð1  RÞ (13)
(2007), which is formulated as follows:
where MC denotes marginal abatement cost, (RMB/ton); R repre-
X 44 sents reduction proportion, (%); a, and b are parameters reflecting
Total emission ¼ CEi
NCVi
CEFi
COFi
(10)
12 the differences in the economic structure and technology
i
Table 1
where i is the index of different types of fossil fuel; CEi is the total The marginal abatement cost of China in 2020.
consumption of fuel i; NCVi is the average low calorific value of fuel
Emission ratio Marginal abatement cost (RMB/ton)
i; CEFi is the carbon emission coefficient of fuel i; COFi is carbon
1% 0.52
oxidation factor of fuel i, 44/12 is transformation coefficient from
5% 0.91
carbon to carbon dioxide. 10% 2.54
Based on China's national mitigation target submitted to the 20% 24.72
United Nations Framework Convention on Climate Change 30% 83.93
(UNFCCC) as part of the Copenhagen Accord, the target national 40% 257.46
50% 504.12
emission intensity of 2020 can be calculated as follows:
 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193 189

constitution for different provinces/departments, the value can be scenarios are analyzed in this research, including: a) allocate the
obtained through regression analysis. national carbon intensity reduction target among various prov-
For province (or department) i, we have: inces, and b) allocate the national carbon intensity reduction target
among various departments. Optimal allocation strategies can be
ei identified under such two scenarios.
ri ¼ 1  (14)
en

where ri denotes the factor that the national carbon intensity 3.4. Method of solution
should decrease (ri > 0) or increase (ri < 0) so as to equal the slope of
marginal abatement cost curve of province (or department) i; ei is The solution algorithm of HNGP-QAM can be summarized as
carbon intensity of province (department) i; en is the national follows:
carbon intensity; ri > 0 when carbon intensity of province
(department) i is less than that of national, and ri < 0 when carbon Step 1: Assume the historical CO2 emission and GDP data series
intensity of province (department) i is greater than that of national. both at national and provincial/departmental level
The marginal abatement cost of province (department) i with ð0Þ ð0Þ ð0Þ ð0Þ
xj ¼ fxj ð1Þ; xj ð2Þ; …; xj ðnÞg;
emission reduction proportion Ri can be calculated as follows:
Step 2: Use AGO to form a new data series.
    ð1Þ ð1Þ ð1Þ ð1Þ ð1Þ ð0Þ
Ri xj ¼ fxj ð1Þ; xj ð2Þ; …; xj ðnÞg; xj ð1Þ ¼ xj ð1Þ;
MCi Ri ¼ MC Ri þ ri  MC ri ¼ b ln 1  (15)
1  ri ð1Þ P ð0Þ
xj ðkÞ ¼ ki¼1 xj ðiÞ; k ¼ 2; 3; …; n;
which can be translated in the form of emission reduction: Step 3: Calculate background values z(1), built by the mean
generating operation,
 
Ai Step 4: Estimate the developing coefficient a and b through the
MCi Ai ¼ b ln 1  (16)
Ei ð1  ri Þ adoption of the least-square method and establish the grey
differential equation,
where Ai is the emission reduction of province (department) i, Ei is Step 5: Solve the grey differential equation together with initial
the total emission of province (department) i. condition and the desired forecasting output at step k can be
Thus, the total abatement cost of emission reduction of province obtained,
(department) i can be calculated as follows: Step 6: Calculate the national carbon emission reduction target
0 1 and the amount of allowable emission for the 30 provinces and 6
ZAi    departments,
B C s
Ci @Ai A ¼ b ln 1  ds Step 7: Calculate the corresponding carbon intensity of national,
Ei ð1  ri Þ provincial/departmental in the year 2020 based on the pre-
0
2 0 1 3 dicted CO2 emission and GDP data series,
 Step 8: Formulate the HNGP-QAM and put forecasting carbon
6 B C 7 Ai
¼ b4Ei @1  ri A  Ai 5ln 1   bAi (17) intensity of provinces and the amount of allowable emission
Ei ð1  ri Þ
into the HNGP-QAM as scenario 1,
Step 9: Solve the HNGP-QAM and analyze the obligation that
Then, the nonlinear quota allocation optimization model can be each of provinces should bear to achieve China's 2020 carbon
formulated: intensity reduction target under scenario 1,
X
   
Ai
 Step 10: Put forecasting carbon intensity of departments and the
min TC ¼  b Ei 1  ri  Ai ln 1   bAi amount of allowable emission into the HNGP-QAM as scenario 2,
i
Ei ð1  ri Þ Step 11: Solve the HNGP-QAM and analyze the obligation that
(18) each of departments should bear to achieve China's 2020 carbon
intensity reduction target under scenario 2.
subject to
X
Ai ¼ A; (19) 4. Result analysis and discussions
i
4.1. Carbon intensity forecasting
Ai  0; (20)
The goal of GM (1, 1) model is to extract as much information as
The annual time series data on GDP used in this study is ob- possible from the historical data for forecasting time-series carbon
tained from the China Statistical Yearbook (China Statistical emission over the planning horizon. The data from 1980 to 2011 can
Yearbook, 1996e2012). The real GDP (at the 1996 constant prices) be used to compare with the prediction values. Moreover, two
from 1996 to 2011 is calculated according to the China's GDP common criteria including the MARE (Mean Absolute Relative Er-
deflator. According to the IPCC guideline and energy consumptions ror) and the correlation coefficient (R2) can be utilized for evalu-
from 1980 to 2011, China's energy-related carbon emission both at ating prediction performances of the GM (1, 1) model. If the value of
national and provincial/department levels are calculated, the cor- R2 is close to one or the value of MARE is close to zero, then the
responding data are collected from the China Energy Statistical GM(1, 1) model is considered performing very well in forecasting.
Yearbook and the China Statistical Yearbook (China Statistical The two criteria can be defined as follows:
Yearbook, 1996e2012; China Energy Statistical Yearbook,
1986e2012). Four regions in China (i.e., Tibet, Hong Kong, Macao, 1X n
ðyt  byt Þ
and Taiwan) are excluded because of the data absence. The MARE ¼
100% (21)
n t¼1 yt
department is divided into 6 according to the China Statistical
Yearbook. Based on the related policies and practical situations, two
190 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193

Emission intensity (ton/10 RMB)

Pn 2 400000 Carbon emission Emission intensity 25
ðyt  b
yt Þ

Carbon emission (10 ton)

R2 ¼ 1  Pt¼1
100% (22) 350000

4
n 2 20

4
t¼1 ðyt  yt Þ
300000
250000 15
where yt denotes the actual values of carbon intensity, b y t denotes 200000
150000 10
the forecasted values of carbon intensity, yt denotes the average
100000
values of carbon intensity, t is the time periods (t ¼ 1, 2, …, n), and n 50000
5

is the total observation number. 0 0

In this research, values of MARE and R2 through GM (1, 1) model

Guangdong

Chongqing

Yunnan
Shandong
Inner Mongolia

Guangxi

Guizhou
Shanghai

Hunan
Liaoning

Zhejiang
Anhui
Shanxi

Heilongjiang

Sichuan

Shaanxi
Qinghai
Ningxia
Henan

Gansu
Jiangsu

Xinjiang
Jiangxi

Hainan
Fujian
Beijing

Hubei
Tianjin
Hebei

are 2.23% and 96.52%, respectively. It is indicated that the predic-
tion results of GM (1, 1) model well match the actual data from 1980
to 2011. Fig. 4 presents the forecasting outputs of annual carbon
emission from 1980 to 2011. The results imply that the GM (1, 1)
model can well capture the variations of carbon emission in the
future.
Similarly, carbon intensity of each province (or department) is
calculated based on the predicted data of carbon emission and GDP
of each province (or department) in 2020. Fig. 5 displays the fore-
casting carbon intensity and carbon emission of various provinces.
A significant difference is observed among various provinces due to
the diversities in energy consumption structure and level, techno-
logical level, economic aggregation, and industrial structure. The
high emission regions are mainly distributed in coastal developed
provinces such as Shandong, Hebei, Jiangsu, Guangdong, Liaoning,
Zhejiang and a few inland areas such as Inner Mongolia, Henan,
Shanxi. Especially for Shandong and Inner Mongolia, the carbon
emission would reach as high as 3.55 and 2.76 billion tons, which is
far more than the average carbon emission by provinces. The total
economic aggregation and energy consumption in these regions all
rank top in China, and mainly rely on industrial department, which
consider coal as the dominating fuel. The total CO2 emission of
these regions accounts for 60.52% of the total national emission,
where have been focused on much attention from multi-level
governments in China. These regions should change their eco-
nomic growth patterns, and adopt some necessary policies and
measures to mitigate carbon emission growth rate and control their
carbon emission. Conversely, Hainan, Beijing, and Qinghai have
lower CO2 emissions. The reason is attributed to that the economic
scale of Hainan and Qinghai. The growth rates of their provincial
economies are slightly low, and the total energy consumption is
extremely small. Comparatively, CO2 emission in Beijing is closely
related to its industrial structure and energy structure. For example,
the GDPs of Hainan and Qinghai were 252.27 and 167.04 billion
RMB in 2011, among which the tertiary industry was accounting for
45.54 and 32.34%, respectively. Furthermore, the total energy
consumption was only 16.01 and 31.89
106 tons of standard coal
equivalent, each of which was far less than the developed prov-
inces. The small amount of energy consumption correspondingly
led to low emission amounts of carbon in these two provinces. As
for Beijing, the GDP was 1625.19 billion RMB in 2011, and the
12000 Relative error Observation
Carbon emission (10 6 ton)
Jilin
Fig. 5. The forecasting carbon emission and intensity of various provinces in 2020.
percentage of tertiary industry was as high as 76.07%, implying a
reasonable industrial structure (China Statistics Yearbook, 2012).
The regions of high carbon intensity are mainly located in the
west, such as Ningxia, Inner Mongolia, Xinjiang, Guizhou, Shaanxi,
Gansu, and a few central provinces, such as Shanxi. On the one
hand, these provinces have a low economic development level. A
“three high” development mode, which is characteristic of high
inputs, energy consumptions, and emissions, is the mainstream for
industrial development. Furthermore, the low level of industrial
technology and high energy consumption make the situation
worse. For example, the energy consumption per 104 RMB of gross
regional product were 2.28, 1.41, 1.63, 1.71, and 1.40 tons of standard
coal equivalent/104 RMB for Ningxia, Inner Mongolia, Xinjiang,
Guizhou, and Gansu in 2011, respectively, which was far more than
the average level of 1.04 tons of standard coal equivalent/104 RMB
in China (China Statistics Yearbook, 2012). On the other hand, the
energy consumption structures in these provinces are mostly un-
reasonable, representing by large amount of coal consumptions. In
fact, to boost economic growth, these less developed inland prov-
inces even provide preferential policies to attract pollution- and
energy-intensive industries from China's developed coastal prov-
inces. For example, the industrial production of the west and the
east China accounted for 59% and 41% in 1986, while this value
changed to 64% and 36% in 1995. The migration of industrial pro-
duction from the east to the west was as high as 5% during the last
ten years. At the same time, the migration of the discharged COD
and sulfur dioxide from the east to the west reached 7% and 3%,
respectively. Under national strategies to stimulate economic
growth in central and western China, these provinces may become
the hotspots of carbon emission in the near future. On this back-
ground, these provinces should strive for national fiscal and
financial support, promoting industrial structure adjustment and
optimization, strictly control the technological level of new project
to avoid (three high) enterprise's shifting to backward parts in
China. Further efforts should be made to accelerate elimination of
backward production capacity, optimize energy consumption
structure, and shorten the gap between the developed and devel-
Prediction 0.5 oping provinces. For example, the percentage of tertiary industry
were 34.9, 34.0, 34.8, and 39.1% for Inner Mongolia, Xinjiang,

Shaanxi, and Gansu, respectively, each of which was far lower than
the average level of 40.2% in China in 2011 (China Statistics
Relative error

6000
0 -0.5
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Fig. 4. The outputs for annual carbon emission under the grey prediction modeling.
Yearbook, 2012).
0 The low carbon intensity regions are largely situated in coastal
areas, such as Zhejiang, Fujian, Jiangsu, Tianjin, Guangdong, and
Shanghai. The reason is owing to their high economic development
level, the advanced manufacturing techniques and technological
levels, and the high proportion of technology-intensive and service
industries. However, compared with the developed countries, there
are still gaps to lower the carbon intensities in these provinces (as
shown in Table 2). This requires further adjustment of the industrial
 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193 191

Table 2
The composition of three-industry in the developed countries and coastal provinces in China (%).

Year United States United Kingdom Japan Zhejiang Fujiang Jiangsu

PI* SI* TI* PI SI TI PI SI TI PI SI TI PI SI TI PI SI TI

2000 1.2 24.2 74.6 1.0 28.2 70.7 1.8 32.4 65.8 11.0 52.7 36.3 16.3 43.7 40.0 12.0 51.7 36.3
2005 1.3 22.0 76.7 1.0 26.2 72.8 1.7 30.2 68.1 6.6 53.4 40.0 12.8 48.7 38.5 8.0 56.6 35.4
2010 1.2 21.4 77.4 0.7 21.1 78.2 1.5 28.0 70.5 4.9 51.6 43.5 9.3 51.0 39.7 6.1 52.5 41.4

PI denotes Primary Industry. SI represents Secondary Industry. TI is Tertiary Industry.

structure, upgrade enterprise's production techniques, and opti-
mize energy consumption structure to develop low carbon
economy.
From the above analysis, a conclusion can be made that the CO2
emission has a slight relationship with carbon intensity, but a close
relationship with the stage of economic and industrial develop-
ment. For example, economic development levels of Ningxia and
Guizhou are both low, while the carbon intensity in this two
provinces rank top in China. On the contrary, the economic devel-
opment levels of Guangdong, Zhejiang, Jiangsu, and Shanghai are
high, while their carbon intensities are averagely low in China.
Based on the tendencies of economic development from the
developed countries, economic development is generally associ-
ated with high energy consumption, high emission and low output
in the beginning stage of economic development level. Along with
the gradual upgrading and optimization of industrial structure and
the improvement in energy efficiency, the economic development
gradually presents characteristics of low energy consumption, low
emission and high output.
Table 3 lists the forecasting carbon emission and intensity of
various departments in 2020. The industrial department shows the
highest carbon emission and intensity. The primary industry shows
the lowest carbon emission and intensity. The industry depart-
ment, especially for manufacturing industry, is the main energy-
consumption industry. Although great improvement has been
made in energy conversion efficiency in recent years, there is still a
large gap in energy intensity compared with that of the developed
countries. With the advancement of industrialization and urbani-
zation, the increasing demand for building materials and vehicle is
emerged. This lead to high CO2 emission during their
manufacturing processes. Furthermore, the development of trans-
portation would accelerate the consumption of energy resources,
such as petroleum. Since China is such a developing country of
lacking petroleum resource, its petroleum supply depends highly
upon imported. This is detrimental for China's energy security. In
this context, China should speed up energy conversion efficiency,
update energy utilization technology, improve the efficiency of
energy utilization, and reduce carbon emission.
4.2. Carbon reduction among provinces
Fig. 6 displays the optimal carbon emission reduction schemes
under scenario 1 (i.e., the target of reduction by 40e45%). Provinces
that are among the highest emission reduction ratios are Inner
Mongolia (21.06%), Shanxi (11.16%), Shandong (11.12%), Ningxia
(8.96%), and Shannxi (5.67%). The proportion of the above five
emission reduction provinces accounts for 57.98% of the total na-
tional emission reduction. The corresponding emission reduction
are 688.6, 364.9, 363.6, 292.8, 185.5
106 tons under the target 40%,
and 959.2, 508.3, 506.5, 407.9, 258.4
106 tons under the target
45%, respectively. Comparatively, provinces that are among the
lowest emission reduction ratios include Beijing (0.10%), Qinghai
(0.18%), Chongqing (0.35%), Shanghai (0.35%), and Tianjin (0.40%).
While the corresponding emission reduction are 3.4, 5.8, 11.3, 11.4,
13.0
106 tons under the 40% reduction target, and 4.7, 8.1, 15.7,
15.9, 18.2
106 tons under the 45% target, respectively, which are
far lower than the highest emission reduction provinces. The re-
sults indicate that a small number of provinces would shoulder a
large proportion of national emission reduction task based on the
principle of minimizing the total abatement cost. From the point of
view of geographical space, the percentage of emission reduction
are 48.53, 28.26, and 23.21% for the west (which refers to Sichuan,
Chongqing, Guizhou, Yunnan, Shannxi, Gansu, Qinghai, Ningxia,
Xinjiang, Guangxi and Inner Mongolia), the east (which refers to
Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian,
Shandong, Guangdong and Hainan), and the central China (which
refers to Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei
and Hunan), respectively. The corresponding emission reductions
are 1.58, 0.92, and 0.76
106 tons under the 40% target, and 2.21,
1.29, and 1.06
106 tons under the 45% target, respectively. Nearly
half of the national emission reduction assignment will be under-
taken by the west. The reason may be attributed to the extensive
economic growth mode in the west. Furthermore, the difficulty of a
region's carbon emission reduction is highly related to its present
carbon intensity. Specifically, higher carbon intensity means higher
emission reduction potential. This would lead to a lower marginal
abatement cost compared with lower carbon intensity provinces,
which would also allocate more emission reduction assignments.
For example, the carbon intensity of Ningxia, Shanxi, and Inner
Mongolia in 2020 would be 19.9, 8.43, 8.38 ton/104 RMB, and the
corresponding emission reduction would be 29,285.08
104,
36,494.95
104, 68,864.27
104 tons, respectively. However, if the
carbon intensity of two provinces is the same, then the difficulty of
a provincial carbon emission reduction would be highly related to
its carbon emission. Specifically, a higher carbon emission would be
associated with a higher carbon emission reduction quota, and a
Carbon emission (10 ton)

120000 40% 45% Reduction ratio 0.25

4

Reduction ratio

100000 0.2
Table 3 80000
0.15
The CO2 emission and intensity of various departments in 2020. 60000
0.1
40000
Department Emission (104 ton) Emission intensity (ton/104 RMB) 0.05
20000
Primary industry 8793.79 0.06222 0 0
Guangdong

Chongqing

Yunnan
Shandong

Guangxi

Guizhou
Shanghai

Hunan
Liaoning

Zhejiang
Anhui
Shanxi

Sichuan

Shaanxi
Qinghai
Ningxia
Henan
Inner

Gansu
Jiangsu

Xinjiang
Jiangxi

Hainan
Fujian
Beijing

Hubei
Tianjin

Heilongjia
Hebei

Jilin

Manufacturing 1,733,853.95 5.83874

Construction industry 5797.59 0.11961
Transportation 69,816.51 1.67081
Wholesale and retail 12,546.22 0.20280
Living consumption 35,417.96 0.22990
Fig. 6. The optimal carbon emission reduction allocation scheme under scenario 1.
192 X. Wang et al. / Journal of Cleaner Production 83 (2014) 185e193
Table 4
The optimal carbon emission reduction allocation scheme under scenario 2.
Department The target reduction case
40% (104 ton)
Primary industry 17.45
Manufacturing 322830.30
Construction industry 22.11
Transportation 3719.86
Wholesale and retail 81.14
Living consumption 259.65
lower difficulty of carbon emission reduction. For example, the
carbon intensity of Liaoning and Qinghai province would be 2.70
and 2.71 ton/104 RMB, and the carbon emission would be
124,091.48
104 and 7252.05
104 tons, while the carbon emis-
sion reduction of the two provinces are 9965.5
104 and
583.44
104 tons, respectively. The reason is that the marginal
abatement cost is directly related to the corresponding reduction
ratio, the province that is generating more carbon emission would
bear a higher emission reduction assignment when the reduction
ratio is the same.
4.3. Carbon reduction among departments
Table 4 lists the optimal carbon emission reduction allocation
scheme under scenario 2 (i.e., the target of reduction by 40e45%).
Obviously, the industrial department would bear the primary
emission reduction assignment. Also, the primary industry bears
the least emission reduction assignment. For example, the carbon
emission reduction of industrial department would be
322,830.3
104 and 449,652.5
104 tons under the reduction ratio
of 40 and 45%, respectively. The carbon emission reduction of the
primary industry would be 17.45
104 and 24.30
104 tons under
the reduction ratio of 40 and 45%, respectively. The industrial
department has been a major driving force of China's economic
boom and related energy consumption over the last decade,
although its share of energy demand would likely decrease with
continued economic development and change in industry struc-
ture, production by major industries will continue to have impor-
tant energy and CO2 implications. Over the next decade, there are
still significant opportunities for efficiency improvements and
technology upgrade in the industrial sector (Zheng, 2013).
Fig. 7 displays the total abatement cost under the two allocation
schemes. The total abatement cost of scenario 2 would be higher
than that of scenario 1. The total abatement cost would be
92.07
109, 98.93
109, and 180.57
109, 194.19
109 RMB for
provincial and departmental allocation schemes under the reduc-
tion ratios of 40 and 45%, respectively. The reason is that the in-
dustrial departments would shoulder the majority of emission
9
Total reduction cost (10 RMB)
200
150
100
50
40% 45% 40% 45%
Scenario 1 Scenario 2
(Provincial level) (Departmental level)
Fig. 7. The total abatement cost under different allocation schemes.
reduction assignment under scenario 2. Obviously, higher indus-
trial production would correspond to a higher emission reduction
assignment. However, the high industrial production area is usually
45% (104 ton)
situated in the developed provinces, which has low emission
reduction potential. In other words, the marginal abatement cost is
24.30
high in those areas, which would lead to the high total abatement
449652.50
30.80 cost. Under scenario 1, the province of low marginal abatement cost
5181.19 would be allocated more emission reduction assignment with the
113.01 consideration of the minimum total abatement cost. Also, the
361.66
optimal allocation scheme would be obtained taking full advantage
of the marginal abatement cost of each province.
5. Conclusions
In this research, a hybrid nonlinear grey-prediction and quota
allocation model (HNGP-QAM) was developed for supporting
optimal planning of China's carbon intensity reduction in 2020. The
grey prediction modeling was used to assist in obtaining variations
in carbon intensities in the near future, which can help identify
China's corresponding reduction target in 2020. Also, the carbon
intensity reduction target could be allocated among provinces and
departments through the adoption of an optimization model. At the
same time, issues concerning the minimum total abatement cost
could be effectively addressed. Thus, optimal strategies on alloca-
tion scheme among provinces and departments could be obtained
based on this two techniques incorporation.
The results showed that the total abatement cost would be
92.07
109, 98.93
109, and 180.57
109, 194.19
109 RMB for
provincial and departmental allocation schemes under the reduc-
tion ratios of 40 and 45%, respectively. It also suggested that the
allocation scheme among provinces was superior to that among
departments. Furthermore, the west, the east, and the central China
would be allocated the emission assignment accounting for 48.53,
28.26, and 23.21% of the total national emission reduction,
respectively. A small number of provinces would undertake the
most national emission reduction task based on the principle of
minimizing the total abatement cost, and the difficulty of a region's
carbon emission reduction was highly related to its carbon in-
tensity. The Manufacturing would shoulder the most emission
reduction assignment, while the primary industry would take on
the least emission reduction assignment. There were still signifi-
cant opportunities for efficiency improvements and technology
switching in the industrial sector. The results generated from the
developed approach were useful for government in providing in-
formation to identify the carbon intensity reduction target in 2020,
conducting emission reduction assignment among provinces and
departments, as well as other supporting relevant policy-making.
The results indicated that the developed method be applicable to
other engineering and planning problems.
Acknowledgments
This research was supported by the National Science Foundation
for Innovative Research Group (51121003), the special fund of State
Key Lab of Water Environment Simulation (11Z01ESPCN), and the
National Science & Technology Pillar Program during the Twelfth
Five-year Plan Period (2011BAJ07B04). The authors would like to
extend special thanks to the editor and the anonymous reviewers
for their constructive comments and suggestions in improving the
quality of this paper.
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