Interconnections between industrial structure and climate change

Climate change is affected by many factors, including natural conditions and human production activities. For this reason, international agencies have conducted extensive scientific argumentation and research on this, such as the IPCC’s Fourth Assessment Report on Climate Change (AR4) (Metz et al., 2007) and the World Bank’s World Development Report (World Bank, 2010). These studies discuss such issues as the causes of climate change, the impact of human activities on climate change and how human society adapts and mitigates climate change. At present, a consensus has basically reached in the scientific community that climate change, or a significant increase in global greenhouse gas (GHG) emissions, can be attributed to the massive consumption of fossil energy since the industrialization of mankind. Therefore, in the subsequent studies, the academic community mainly focused on such issues as the “construction of a greenhouse gas distribution framework,” “influencing factors of greenhouse gas emissions” and “what measures are taken to mitigate and adapt to climate change,” with little examination of the relationship between humanity’s most frequent industrial activities, industrial structure, energy consumption and carbon emissions. Various practical experiences show that the occurrence of climate change is intricately entwined with a country’s industrial structure.

Research on the relationship between industrial development and climate change

In terms of sources, carbon emissions mainly arise from the two aspects of production and consumption. Carbon emissions from Western developed countries are mostly generated in the consumption sector, and the ratio of carbon emissions between companies and residents is close to 3:7; whereas they are produced mainly in the production sector of developing countries, which is the opposite of the situation in their developed counterparts; that is, the ratio of carbon emissions of enterprises and residents is about 7:3. The large differences in the sources of carbon emissions between developed and developing countries indicate that in developing countries such as China, the major pressure for China to control carbon emissions will lie in the production sector for a long time to come. Therefore, the development model of the national industry and the status of industrial structure will become one of the important parts of future actions to address climate change, which will face corresponding adjustments and supervision.

Industrial activities and carbon emissions

With respect to the classification of industries, it is more common to follow the method of division of primary, secondary and tertiary industries. Due to the special nature of production activities in various industries, different carbon emission characteristics are exhibited. First is the discussion about the characteristics of the development and carbon emissions of modern agriculture that account for the largest share of the primary industry. From a holistic point of view, modern agriculture belongs to high-carbon agriculture, which consumes a lot of fossil energy in the production process. The specific links related to the consumption of fossil fuels in agricultural production activities include the application of chemical fertilizers and pesticides, use of agricultural machinery, and processing, storage and transportation of agricultural products. Among them, as an important part of modern agriculture, the use of chemical fertilizers and pesticides has been used in large quantities in the production process, but there are potential disadvantages of high energy consumption and large pollution. Because China mainly uses coal for energy generation in the production of synthetic ammonia (made of urea), it is estimated that about 3.4 tons of CO, will be emitted per ton of ammonia, which is the release of CO, from the production process of fertilizers (Qi & Chen, 2010). In addition, improper application of chemical fertilizers and pesticides will also destroy the natural organic composition of soil and accelerate the rate of mineralization of organic carbon in farmland soil, thereby releasing more gases such as CO, and methane into the atmosphere, and creating more pressure by increasing the concentration of GHGs in the air and accelerating the process of climate change.

Industries and construction covered by the secondary industry are the largest sources of carbon emissions. The development of traditional industries is always closely related to the supply of fossil fuels. Compared with developed countries that have already entered the stage of post-industrialization and engaged in transferring heavy industrialization and high energy-consuming enterprises outward with constantly cleaning and premium industrial structure, China is still in the process of urbanization and modernization. In order to support national economic development and infrastructure construction, the industry is undergoing rapid development with great demand for energy supply. In particular, heavy chemical industries such as thermal power, metallurgy, non-ferrous metals, chemicals, petrochemicals, automobiles, shipbuilding and machinery manufacturing are typical industries with high energy consumption and severe pollution, whose development will result in huge carbon emissions. In addition, the energy consumption of construction industry is also very high, not only because of the high consumption of cement and steel used in construction industry, but also that of the building itself. According to the statistics of the UN Climate Change Special Committee, about 0.8 tons of CO, are released per square meter of housing area built, while the energy consumed by buildings accounts for 20.7% of total energy consumption.

Tertiary industry refers to the modern service industry that consists of finance and insurance, news media, advertising consulting and tourism communications, most of which are basically clean industries with low energy consumption, low pollution, low- and even zero-carbon emissions, except for the transportation industry. The reason why the transportation industry is characterized by high consumption and high emission is the extensive use of automotive fuels, especially the extensive application of petroleum, kerosene and diesel fuel in transportation. A car emits 2.2 kilograms of CO, on average for every liter of gasoline burned. Per-capita energy consumed for every 100 kilometers of a bus is 8.4% of a car, while that for an electric car is 3.4-4% of a car and the figure for the subway is 5%. It can be inferred that at present, tens of millions of private cars constitute a large energy consumer in the transportation industry, and the growing number of private cars in the future will continue to push up the level of carbon emissions in the transportation sector.

With the gradual promotion of the development of a low-carbon economy with carbon emission constraints as the main feature, a new category of “low-carbon industry” has been derived on the basis of traditional industries. The low-carbon industry integrates all low- and zero-carbon industries and includes the modern service industry and knowledge- and technologyintensive industrial and agricultural industries. Similar to the traditional classification of the three major industries, low-carbon industries can also be subdivided into low-carbon agriculture, low-carbon industries and low-carbon services. Low-carbon agriculture includes organic agriculture, eco-agriculture, high-efficiency agriculture and forestry in crop farming; low-carbon industries mainly include high-tech industries in biomedicine, new materials, microelectronics, aerospace and marine technology, production and supply of new energy and renewable energy (solar, wind, hydro, biomass, biogas, nuclear and many other low- or non-carbon sources); low-carbon services are other traditional tertiary industries except transportation. It can be seen that in the process of transition from traditional industries to low-carbon industries, the key point is to move high-consumption, high-emission industries toward innovative and clean production.

Industrial structure and climate change

After the separate elaboration on the areas and characteristics of carbon emissions within the three industries, the final emission effects brought about by the different combinations of the three industries need to be comprehensively considered. Changes in industrial structure will affect climate change by changing the amount of GHGs released, whose mechanism of impact can be explained by the “structural dividend hypothesis” theory (Denison et al., 1967; Maddison, 1987): there are systematic differences in the productivity levels and growth rates across industries (sectors). If CO, is viewed as an input element, the output of CO, emissions per unit of different sectors, or CO, productivity (or the reciprocal of CO, emission intensity) is also different. When sectors with low productivity or low productivity growth shift to sectors with higher productivity or higher productivity growth, the total CO, productivity of the economies composed of various sectors will increase. When total productivity growth rate exceeds the rate-weighted sum of productivity growth of each sector, the balance is the contribution of structural changes to productivity growth. For example, service industry tends to have a higher level of CO, productivity (less CO, per unit of output) relative to industry. Therefore, when other conditions remain unchanged, the increase in the proportion of service industry and the decline in the proportion of industry will lead to the increase in CO, productivity and reduction in the amount of GHGs under the same output conditions of the overall macro-economic situation. The indicator of carbon productivity reflects the environmental (carbon emission) cost to obtain a certain amount of production and provides technical indicators for measuring carbon intensity in different industries.

When dealing with the issue of climate change, human society mainly focuses on the two aspects of mitigation and adaptation. Mitigation refers to human’s increase in carbon sinks, reduction of GHG emissions and slowdown of the speed and scale of climate change by altering irrational production and lifestyles; adaptation to society’s response and behavior adjustment to climate change that has occurred or is expected to occur so as to resolve possible climate risks to maintain stable and sustainable continuation and development of human society. In the process of adapting to climate change, human production, life and consumption patterns will change and result in a series of industrial changes in economic development through direct and indirect effects. The most direct impact can be demonstrated by the changing agricultural planting structure and agricultural production layout as a result of the increase in temperature, while the industrial sector and service sectors using agricultural products as raw materials will also be indirectly affected; climate change will also change water resources and ecological systems; therefore, the industrial sectors system that originally relied on these resources/ecosystems will also change in production patterns and geographical distribution. In addition to changing existing industries, in order to mitigate the influence of climate change, new sectors will be derived and developed, such as droughtresistant crops and water-saving industries. The passive change of industrial structure is an intuitive manifestation of climate change adaptation, but only when the initiative of industrial structure changes in the economic society is fully exerted; that is, the behavioral dynamics of climate change mitigation

Connections between structure and climate 35 is effectively stimulated and strengthens a more solid foundation for better adaptability.

The reason why industrial structure adjustment with stronger initiative can produce a progressive effect in response to climate change lies in the different energy consumption of different industrial units. Therefore, the proportion of development of different industries will directly affect the total demand for energy, which in turn can exert an indirect effect on CO, emissions. The rapid development of high-energy-consuming industries will inevitably lead to a strong demand for energy supply, and the expansion of the proportion of tertiary industry in national economy will bring about a reduction in energy consumption, which will slow down the growth of carbon emissions and even reduce carbon emissions in the long run. Therefore, under the dual pressures of ecological environment and human society characterized by carbon emission constraints, the use of industrial structure adjustment as a key way to achieve the desired climate goals has a positive stimulating effect. By controlling the excessive development of heavy chemical industry and promoting orderly expansion of the tertiary industry, the economic development model will be transformed from an industrialized to an information-based economic structure, which will effectively promote the dual reduction of energy demand and carbon emissions.

However, whether it is a country or a region, its industrial structure is determined by its economic development process at the current stage, inevitably adapted to the current state of economic development and is a development process of causality. When the development of primary industry does not play a role in ensuring food security, the development base of the secondary industry in the region cannot be guaranteed; and when the development scale of the secondary industry is small, and the per-capita income level is low, the development of the tertiary industry in the region will not be able to be settled. Therefore, the overall consideration of carbon emission reduction should not be viewed only from the reduction in energy consumption and emissions, regardless of the objective law in the process of economic development. Any overriding development that derails from the actual needs of development or objective track of growth may lead to disguised and distorted economic structure, thus undermining the long-term sustainable development of real economy. Therefore, cautious consideration of industrial structure adjustment plans is necessary. While developing industries with low energy consumption and high energy efficiency, the effective method to reduce energy consumption and CO, emissions is to standardize and guide the orderly development of high-energy and high-pollution industries and eliminate outdated production capacity incompatible with market needs.

Industrial structure and energy utilization

Because energy consumption has a direct relationship with carbon emissions, when the relationship between industrial structure and carbon emissionsis under discussion, it is possible to simultaneously examine the possible relationships between industrial structure adjustment and utilization of energies, which may offer more specific approaches and methods for studying the role of industrial adjustment in emissions reduction. As different energy use structures and efficiency will bring about different levels of carbon emission, the relationship between industrial structure and energy structure and energy efficiency can be studied to help clarify the relationship between industrial structure and energy use, therefore providing more broad ideas and methods for solving the issue of climate change.

Different types of industries will cause various CO, emissions during the production process, which mainly depends on the specific nature of production activities of different industries and their diverse needs for various types of energy. For example, some industries tend to consume coal resources, while others use less coal resources or tend to use other types of energy. With the same unit of energy consumption, industries that consume more coal or prefer to consume coal will generate more carbon dioxide. Therefore, the former is called high-carbon industry while the latter is called low-carbon industry.1 In this regard, changes in industrial structure will directly affect energy demand and change energy consumption. By increasing the structural ratio of the tertiary industry, reducing that of the primary industry and optimizing the internal structure of the secondary industry, in particular the layout of the high-energy-consuming industries in the industrial sector to enhance the industrial structure, balanced development of China’s energy consumption can be effectively promoted, getting rid of the overriding coal consumption ratio and forming a diversified energy consumption structure system (Peng & Bao, 2006). The available model proves that the adjustment of industrial structure can optimize energy structure and reduce the total carbon emissions (Li et al., 2005). The model is assumed to be as follows.

Assume that the energy consumption structure of high-carbon industries and low-carbon industries is fixed; that is, the proportion of consumption among various energy sources is fixed. Assume that the high-carbon industry has a high-carbon energy consumption of c,, a low-carbon energy consumption of (Zj, and an energy structure of cxldx. The high-carbon energy consumption of the low-carbon industry is a., the low-carbon energy consumption is bx, and its energy structure is axlbx. Then cxldx>axlbx. The total energy consumption structure is xxlyx, where A’, — ax+cx and yx - bx+dx.

As shown in Figure 2.1, the horizontal axis represents high-carbon energy consumption, while the vertical axis represents low-carbon energy consumption. When the scale of low-carbon industries is expanded by changing the consumption of high-carbon energy from ax to a2 and the consumption of low-carbon energy from bx to b2, at the same time, the scale of high-carbon industries is reduced by changing the consumption of high-carbon energy cx to c2 and low-carbon energy consumption from dx to d2, the total high-carbon energy consumption will change from x, to x,, the low-carbon energy consumption from to y2, and the energy structure from xx!yx to x2ly2. From

Industrial structure adjustment and energy structure optimization

Figure 2.1 Industrial structure adjustment and energy structure optimization

Figure 2.1, it can be seen that x2ly2tlyi, or after adjustment of the industrial structure, the proportion of high-carbon energy consumption has decreased, the proportion of low-carbon energy consumption has increased and the energy structure has been optimized.

It can also be deduced using a simple mathematical formula. Assume that the energy consumption of the high-carbon industry is reduced by k times, or c2 = kc{ and d2 = kdt. The energy consumption of low-carbon industries has increased by a factor of g, or b2 — gbt and a2 — gat. Then the changed energy consumption structure is (gat + kc{)l(gb{ + kdf.

Because the ratio of high-carbon and low-carbon energy consumption in high-carbon industries is higher than that in low-carbon industries, ajb < cj dA, or < ctxdh and g > ljc< 1, then gk > 0, so:

With the decrease in the proportion of high-carbon energy in energy consumption structure after the adjustment of the industrial structure and increase in the proportion of low-carbon energy, energy structure will be optimized.

Raising the efficiency of energy use can effectively ease the tension between supply and demand, which is an important guarantee for sustainable economic development in the future. Similarly, changes in industrial structure will also have an impact on energy efficiency. There are many indicators of energy efficiency. To put it simply, energy intensity here is used as an indicator of energyefficiency. Changes in industrial structure will affect energy intensity, because of the different energy intensity of various industries. When industries with high energy intensity occupy a large proportion of the national economy with comparatively faster growth rate, energy intensity will increase (Shi, 2002). It is also possible to use a simple mathematical formula to explain the mechanism of industrial restructuring on energy efficiency.

For the sake of simplicity, assume that the national economy consists of two industries: high-carbon and low-carbon industries. Supposing that the energy consumption intensity of each industry remains unchanged, the energy intensity can be expressed as:

Among them, I indicates the intensity of energy consumption, /, the intensity of industrial energy consumption, the proportion of industrial economy, 1 low-carbon industry and 2 high-carbon industry. Assume that Az represents the amount of change in the proportion of industrial economy to characterize industrial restructuring. The national energy consumption intensity after the change of industrial structure is:

Because /,>/,, there is f < I. This indicates that decline in the proportion of high-carbon industries and increase in the proportion of low-carbon industries has led to a decline in the national energy intensity. Although only the national economy of two industries is analyzed here, for a multisectoral national economy, the mechanism of adjustment of its industrial structure is essentially the same as that of the change in energy intensity.

It can be seen that the optimization and adjustment of the industrial structure will positively promote and enhance the energy structure and efficiency. The expansion of the overall share of clean and highly efficient industries will be very conducive to tackling the high pollution and inefficiency of energy use. Therefore, when issues of climate change, energy conservation and emission reduction are considered, from the perspective of energy structure and energy efficiency, industrial upgrading and adjustment will be an effective way to solve the issue of climate change.

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