Cutting CO2 emissions through demand side regulation: Implications from multi-regional input—output linear programming model

This study combines multi-regional input—output (MRIO) model with linear programming (LP) model to explore economic structure adjustment strategies for the reduction of carbon dioxide (CO2) emissions. A particular feature of this study is the identification of the optimal regulation sequence of final products in various regions to reduce CO2 emissions with the minimum loss in gross domestic product (GDP). By using China’s MRIO tables 2017 with 28 regions and 42 economic sectors, results show that reduction in final demand leads to simultaneous reductions in GDP and CO2 emissions. Nevertheless, certain demand side regulation strategy can be adopted to lower CO2 emissions at the smallest loss of economic growth. Several key final products, such as metallurgy, nonmetal, metal, and chemical products, should first be regulated to reduce CO2 emissions at the minimum loss in GDP. Most of these key products concentrate in the coastal developed regions in China. The proposed MRIO—LP model considers the inter-relationship among various sectors and regions, and can aid policy makers in designing effective policy for industrial structure adjustment at the regional level to achieve the national environmental and economic targets.