Capital Driving “Stickiness”, Intertemporal Transfer of Embodied Carbon, and Dynamic Consumption Carbon Footprint

Abstract

Abstract: China’s economic development has long relied on fixed capital input, and the diversity of fixed capital composition and the long-term nature of its use determines the complexity of its embodied carbon transfer. While previous studies have focused on the spatial separation of production and consumption, with trade as the primary focus, there has been a lack of research on the intertemporal transfer of hidden carbon. This can be studied by analyzing the dynamics of capital formation and utilization. In this paper, the capital flow matrix from 2003 to 2020 is used to internalize capital in input-output analysis, and the capital depreciation matrix is used to track the intertemporal transfer of implied carbon in the process of capital use, which is defined as the dynamic consumption carbon footprint. The findings indicate that China has accumulated a significant amount of fixed capital that can be used for future production. The carbon footprint of dynamic consumption is approximately 62% to 77% of that of traditional consumption, with the reduced portion being reflected in future consumption. The sector distribution of the carbon footprint of dynamic consumption is more balanced, with a significant increase in the carbon footprint of the tertiary industry sector, closely aligned with its value added. The key sectors for emission reduction are electric heating production and supply, as well as the equipment and instruments sectors. When considering the carbon emissions caused by the depreciation of fixed capital, the size of the carbon footprint of consumption depends not only on the carbon intensity of current production but also on the extent to which current production relies on past-formed fixed capital and the carbon intensity of previous production. Therefore, policies that modify the service life of fixed assets can partially reduce the dynamic carbon footprint of consumption. This study provides a reference for relevant policymakers.

Key words: capital embodied carbon, intertemporal transfer, dynamic carbon footprint, input-output analysis

Ding Chenxin, Sun Hui, Wang Zhiwei, Gong Yuanyuan, Yan Xinjie, Shen Yunpeng. Capital Driving “Stickiness”, Intertemporal Transfer of Embodied Carbon, and Dynamic Consumption Carbon Footprint[J]. Management Review, 2024, 36(9): 27-42.

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