Identifying the determinants and spatial nexus of provincial carbon intensity in China: a dynamic spatial panel approach

Is emission intensity of carbon dioxide (CO₂) spatially correlated? What determines the CO₂ intensity at a provincial level? More importantly, what climate and economic policy decisions should the China’s central and local governments make to reduce the CO₂ intensity and prevent the environmental pollution given that China has been the largest emitter of CO₂? We aim to address these questions in this study by applying a dynamic spatial system generalized method of moment technique. Our analysis suggests that provinces are influenced by their neighbours. In addition, CO₂ intensities are relatively higher in the western and middle areas, and that the spatial agglomeration effect of the provincial CO₂ intensity is obvious. Our analysis also shows that CO₂ intensity is nonlinearly related to gross domestic product, positively associated with secondary-sector share and foreign direct investment, and negatively associated with population size. Important policy implications are drawn on reducing carbon intensity.