International Oil Price’s Impacts on Carbon Emission in China’s Transportation Industry

Abstract

Purpose: This paper analyses the impact mechanism of international oil price on the industrial carbon emission, and uses the partial least squares regression model to study international oil price’s impact on carbon emissions in China’s transportation industry.

Design/methodology/approach: This paper chooses five independent variables of GDP, international oil price, private car population, passenger and freight transportation volume as impact factors to investigate industrial carbon emissions, the paper also analyses the impact mechanism of international oil price on the industrial carbon emission, and finally the paper uses the partial least squares regression model to study international oil price’s impact on carbon emissions in China’s transportation industry. With the independent variables’ historical data from 1994 to 2009 as a sample, the fitting of the industry carbon emissions is satisfying. And based on the data of 2011, the paper maintains the private car owning, passenger and freight transportation volume to study international oil prices’ impact on the industry carbon emissions at different levels of GDP.

Findings: The results show that: with the same GDP growth, the industry carbon emissions increase with the rise in international oil prices, and vice versa, the industry carbon emissions decrease; and lastly when GDP increases to a certain extent, in both cases of international oil prices’ rise or fall, the industry carbon emissions will go up, and the industry carbon emissions increase even faster while the energy prices are rising.

Practical implications: Limit the growth in private-vehicle ownership, change China's transport sector within the next short-term in the structure of energy consumption and put forward China's new energy, alternative energy sources and renewable energy application so as to weaken the dependence on international oil, and indirectly slowdown China's GDP growth rate, which are all possible solutions to reduce China's transportation industry carbon emission.

Originality/value: The paper presents a method to study international oil prices’ impact on the industry carbon emissions at different levels of GDP; and draws some corresponding proposals on industry carbon emission reduction.