GHG emissions embodied in Macao's internal energy consumption and external trade: Driving forces via decomposition analysis

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GHG emissions embodied in Macao's internal energy consumption and external trade: Driving forces via decomposition analysis ⁎

B. Chena,b, J.S. Lia,c, , S.L. Zhouc, Q. Yanga,c,d, G.Q. Chenb a

State Key Laboratory of Coal Combustion, Huazhong University of Science and Technology, Wuhan 430074, PR China Laboratory of Systems Ecology and Sustainability Science, College of Engineering, Peking University, Beijing 100871, PR China c Department of New Energy Science and Engineering, School of Energy and Power Engineering, Huazhong University of Science and Technology, Wuhan 430074, PR China d Harvard China Project, John A. Paulson School of Engineering and Applied Sciences, Harvard University, Cambridge, MA 02138, United States b

A R T I C L E I N F O

A B S T R A C T

Keywords: LMDI decomposition Energy consumption External trade Embodied emissions Macao

As a member of the Kyoto Protocol, Macao faces the enormous challenge to tackle with energy conservation and greenhouse gas (GHG) emission reduction. Though many studies have been devoted to understanding Macao's GHG emissions from energy consumption and external trade, an investigation of the underlying driving forces is still absent. Therefore, this study decomposed the energy-related emissions change and imbalance in embodied emissions of external trade during 2000–2011, respectively, by using the logarithmic mean Divisia index (LMDI) method. The economic scale effect and energy structure change were identified as the main driving factors of Macao's increasing energy-related emissions, while trade structure and embodied emission intensity contributed to make Macao a net importer of embodied emissions. However, some variations can be seen during the period concerned. Then the underlying reasons for the two decomposition results were further investigated. On account of the results and analysis, instructive policy implications can be put forward for Macao to better proceed with energy conservation and emissions reduction.

1. Introduction

encourage people to gradually abandon private vehicles. Moreover, Macao established an administrative regulation about solar energy and related grid connection in 2015 to promote the renewable energy utilization. As the gaming-related tourism will inevitably boost the development of hotel industry, the local government has set up the “Macao Green Hotel Award” since 2007 to encourage the hotel managers to pursue energy conservation and emission reduction. It is widely recognized that the changes in the economic growth, industrial structure and the mix of energy would all have major impacts on energy consumption and therefore GHG emissions [5–9]. Then question arises: how do these factors influence Macao's GHG emissions? Yet, this question still remains open for answer. Additionally, Macao is characterized as a heterotrophic economy due to Macao's extremely limited territory and natural resources, indicating its heavy reliance on trade. According to the statistics, both imports and exports increased rapidly from 2000 to 2013, with an average annual growth rates of more than one quarter [1,2]. With the Closer Economic Partnership Arrangement between China Mainland and Macao/Hong Kong (CEPA) and the Free Trade Policy, Macao's trade scale will continue to expand. There are mounting studies indicating that external trade could reallocate emissions via outsourcing

Macao has experienced an all-around change in recent decades, especially after its sovereignty was returned to China at the end of the 20th century. During 2000–2013, Macao's GDP grew nearly sixfold [1,2]. In 2002, the Government of Macao SAR launched a reform to establish the strategy that sets developing gaming industry as Macao economy's priority. Since then the economic structure has gone through significant shift. In a long time, Macao's economy was sustained by real estate, garment manufacturing, finance and gaming industry. After the reform policy, gaming industry rapidly outshines others and gradually dominates Macao's economy [3]. In 2010, gaming industry's revenue accounted for 85.2% of Macao's GDP [4]. Besides the remarkable economic achievement, Macao is also keen to make it a low-carbon economy. In 2008, its application to become a party of Kyoto Protocol was approved, marking that Macao takes a leap forward to fighting against global climate change with the international community. Since then, Macao has implemented a sequence of measures to promote energy-saving and GHG emission reduction. For instance, Macao introduced natural gas to replace oil for electricity generation and improved the public transportation facilities to ⁎

Corresponding author at: State Key Laboratory of Coal Combustion, Huazhong University of Science and Technology, Wuhan 430074, PR China. E-mail address: [email protected] (J.S. Li).

http://dx.doi.org/10.1016/j.rser.2017.10.063 Received 25 April 2016; Received in revised form 5 September 2017; Accepted 28 October 2017 1364-0321/ © 2017 Elsevier Ltd. All rights reserved.

Please cite this article as: Chen, B., Renewable and Sustainable Energy Reviews (2017), http://dx.doi.org/10.1016/j.rser.2017.10.063

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understanding of energy consumption and GHG emissions in Macao. Yet the underlying factors driving the energy-related GHG emissions have not been quantified. Secondly, it is obvious the research objects and results in these researches differ from each other. One thing in common, however, is that all these aforementioned studies highlight the significant role of trade in reshaping the profile of energy use and GHG emissions in Macao. There is also no decomposition analysis of emissions embodied in Macao's external trade. Therefore, this study conducts energy-related GHG emissions change decomposition and imbalance of emissions embodied in trade decomposition, respectively, aiming to shed light on the corresponding driving forces.

emission-intensive industries [10–14]. Although energy and GHG emissions embodied in Macao's external trade have been quantified [15–17], an investigation of the underlying factors that drive these emissions is still absent. Given this, the logarithmic mean Divisia index (LMDI) method, which is a powerful tool that can unveil the driving factors behind the changes of GHG emissions, is adopted to decompose the underlying factors impacting the GHG emissions related to internal energy consumption and imbalance of emissions in external trade. Firstly, it's considered to be the first decomposition analysis for GHG emissions by Macao. By identifying the driving factors behind the historical GHG emission change, targeted policy can be formulated for energy conservation and GHG mitigation in Macao to achieve a low-carbon city [18–20]. Secondly, as introduced above, internal energy consumption and external trade are both important in shaping the GHG emission profile in Macao. Therefore, this study decompose the GHG emissions embodied in internal energy consumption and external trade separately, trying to give a more comprehensive overview of the corresponding driving forces. Thirdly, previous decomposition analysis of emissions embodied in trade usually focus on international trade. This study, however, extends the research to the city scale by constructing a comprehensive framework to decompose imbalance of emissions embodied in a city's external trade, which could also be applied for other cities. The rest of the paper is organized as follows: literature review is presented in Sector 2; Section 3 illustrates the methodology and data sources; results and discussions are shown in Section 4, while policy implications and conclusions are illuminated in Section 5.

2.2. Relevant literature about LMDI decomposition Generally, there are three basic decomposition methods: structural decomposition analysis (SDA) [33,34], index decomposition analysis (IDA) [35,36] and production-theoretical decomposition analysis (PDA) [37,38]. All of the three techniques have been widely employed to identify the influences of different driving forces on the overall change in energy use and GHG emissions. SDA is usually coupled with inputoutput analysis to assess the effect of intermediate inputs and final demand, which requires massive data with high resolution. However, Macao has no input-output table. Besides, PDA has the drawback that it cannot reveal the effects of economic structure or energy consumption structure. Consequently, this study adopts IDA to decompose the driving forces of Macao's GHG emissions. It's noted that there are also other more complex methods to evaluate the impacts of various factors on the carbon emissions [39]. Logarithmic mean Divisia index (LMDI) method is the most extensively used method in the index decomposition analysis [8]. Ang and Choi firstly proposed a a perfect decomposition with no residual term [40], which is later referred as the Logarithmic mean Divisia index II (LMDI II) [41]. The LMDI II, however, is not consistent in aggregation. Therefore, Ang and Liu further put forward a new method called Logarithmic mean Divisia index I (LMDI I) to differentiate the LMDI II [41]. The current widely used LMDI method is usually referred to the LMDI I unless otherwise stated, which is primary used to decompose CO2 emission changes. A detailed review of decomposition analysis by applying LMDI method is presented in Table 1. These studies mainly focus on CO2 emission changes from direct energy consumption or industrial production. However, there are only a few studies that pay attention to unveil the driving forces behind the embodied emissions in trade. A review of decomposition analysis of emissions embodied in trade can be seen in Table 2. Most of these studies concentrate on the time-series change of emissions embodied in international trade. Few efforts, however, have been devoted to decomposing the imbalance of emissions embodied in a city's external trade [5,6,42–52]. Based on the previous studies, the energy-related GHG emissions change is decomposed into economic scale effect, industry structure effect, energy intensity effect and energy structure effect from 2000 to 2011 by applying LMDI method. Furthermore, the time period is disaggregated into three stages. Meanwhile, the imbalance of embodied emissions in trade is decomposed into the trade imbalance effect, trade structure effect and emission intensity effect. This study is considered to be the first decomposition analysis of embodied GHG emissions from internal energy consumption and external trade, which could give instructive policy implications for Macao to better proceed with energy conservation and emissions reduction [42,53–55].

2. Literature review 2.1. Relevant literature about Macao Macao is recognized as one of the most crowded regions all around the world, with a population of 636,200 and an area of 30.3 km2 [21]. In order to ease the contradiction between scarce energy resources and growing demand, Macao has imported nearly all of its fuel energy and more than 90% of its electricity now [21,22], making energy supply a key issue in Macao considering the commodity export policy and price [23]. After ratification of Kyoto Protocol in 2008, energy consumption and GHG emission in Macao have attracted more and more attention and series of studies have been carried out to shed light on the related issues. The first comprehensive study about energy use and GHG emissions was conducted by Li et al. [15], revealing that Macao's energy use and GHG emission increased by 31% and 100% from 2000 to 2010, respectively. Then Macao's overall embodied GHG emissions between 2005 and 2009 were estimated [16], which reported that a GHG emission fluctuation was witnessed. As electricity is inseparable part which sustains Macao's socio-economic development and meanwhile emission intensive, its contribution to Macao's GHG emissions also attracted some researchers’ interests. According to To et al. [24], the GHG emissions related to electricity consumption were more than doubled in light of fuel life cycle analysis during 2000–2010 [24]. Lai et al. constructed a model to identify key factors that may affect the electricity consumption of Macao [25]. Furthermore, the co-integrated relationship between Macao's economic growth and electricity consumption was revealed [26]. More specifically, some efforts were devoted to calculating energy consumption and GHG emissions from gaming industry, which is the pillar of Macao's economy [27]. The emergy analysis, which provides an energy basis for the valuation of the goods and services that flow through the ecosystems [28], was applied to investigate Macao's embodied energy flows [29–31]. Recently, Chen et al. examined the decoupling states between Macao's embodied GHG emissions and economic growth [32]. Firstly, these previous studies contribute significantly to deepen the

3. Methodology and data sources 3.1. Energy-related greenhouse gas emissions GHG emissions from energy consumption depend on: 2

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Table 1 LMDI decomposition analysis of direct CO2 emissions change. Authors

Research target

Main conclusion

Bhattacharyya and Ussanarassamee [43] Lee and Oh [44] Liu et al. [45] Hatzigeorgiou et al. [46] Malla [47] Donglan et al. [48] Akbostancı et al. [5] Hasanbeigi et al. [49] Lin and Moubarak [50] Lin and Du [6]

CO2 intensities of Thai industry CO2 emissions in APEC countries China's industrial CO2 emissions CO2 emissions in Greece CO2 emissions from electricity generation residential CO2 emissions in China CO2 emissions of Turkish manufacturing industry energy intensity of California industries CO2 emissions in the Chinese textile industry energy intensity change in China

Moutinho et al. [51]

energy-related CO2 emissions in Europe

Lin and Zhang [52]

Carbon emissions in China's cement industry

Intensities declined due to reduction of in energy intensity and structure change The growth in per capita GDP and population are the two dominant contributors The overwhelming contributors were the industrial activity and energy intensity The biggest contributor is the income effect Production effect is the major factor responsible for rise in CO2 emissions Energy intensity contributed most to the decline of residential emissions Total industrial activity and energy intensity are the primary factors determining the change Reduction of energy use is the result of the intensity effect and the structural effect. Industrial activity and energy intensity were the main determinants Technological change and capital-energy substitution are the major drivers of the declining energy intensity CO2 emissions are determined by the change of population among the various countries Labor productivity was the major driving force of increase in CO2 emission

GEenergy =

∑ ECi × EFi

respectively. Thus, the factors contributing to the GHG emission change can be described by using LMDI as [41,42]:

(1)

i

where ECi stands for energy consumption by energy type i in Macao, which are fossil fuel energy, imported electricity from mainland China and municipal solid waste (MSW) incineration. EFi represents emission factor of energy type i . To meet its rapid economic development and the resulting increasing electricity demand, Macao has imported electricity from Guangdong Power Grid since 1984. With the fuel mix and the technology changing over the 2000–2011, emission factor of imported electricity in different year has been updated by using the methodology introduced by Li et al. [15]. The results are presented in Appendix Table A1.

ΔGEenergy = GE T − GE 0 = ΔGEQ + ΔGEIS + ΔGEEI + ΔGEES

where ΔGEQ , ΔGEIS , ΔGEEI and ΔGEES refer to economic scale effect, industry structure effect, energy intensity effect and energy structure effect, respectively, where ΔGEQ , ΔGEIS , ΔGEEI and ΔGEES are calculated as:

ΔGEQ =

∑ wi ln( i

ΔGEIS =

QiT ) Qi0

(5)

ISiT ) ISi0

(6)

EIiT ) EIi0

(7)

ESiT ) ESi0

(8)

∑ wi ln( i

3.2. Greenhouse gas emissions embodied in trade

ΔGEEI =

GHG emissions embodied in trade can be achieved by:

GEim / ex =

∑ Vi × EFi

ΔGEES =

wi =

The energy-related emission change decomposition is given by:

∑ GEenergy,i i

GEiT − GEi0 ln(GEiT / GEi0)

(9)

where the superscripts T and 0 are the final year and benchmark year, while the subscript i refers to industry type.

3.3. Energy-related emissions change decomposition

GEenergy =

∑ wi ln( i

where Vi is the monetary value of imports/exports, while EFi is the emission factor of item i . Appendix Tables A2 and A3 list the goods and services imported and exported, respectively, which are extracted from Macao Yearbook of Statistics.

Q ECi GEi = ∑Q i = Q Qi ECi i

∑ wi ln( i

(2)

i

(4)

3.4. Imbalance of emissions embodied in trade decomposition

∑ Q × ISi × EIi × ESi

By applying the LMDI method introduced above, the differences between the GHG emissions embodied in exports and imports can be decomposed as follows:

i

(3) where Q is the GDP value, EC refers to energy consumption, GE represents greenhouse gas emissions. i refers to the industry type. Compared to secondary industry and tertiary industry, primary industry is so trivial that can be neglected. ISi , EIi and ESi refer to industry structure, energy intensity and energy structure of industry i ,

GEtrade =

Q GEi = Qi

∑ GEtrade,i = ∑ Q Qi i

i

∑ Q × TSi × EEIi i

ΔGEtrade = GE ex − GE im = ΔGEQ + ΔGETS + ΔGEEEI

(10) (11)

Table 2 LMDI Decomposition analysis of emissions embodied in trade. Authors

Research target

Main conclusion

Dong et al. [53]

CO2 emissions embodied in Japan–China trade

Su et al. [54] Liu et al. [42] Wu et al. [55]

CO2 emissions embodied in processing and normal exports imbalance of emissions embodied in China's trade CO2 emissions embodied in China–Japan trade

Trade volume had a large influence on the increase of CO2 emissions embodiments in bilateral trade Final demand contributed the most to the increase of embodied emissions Large imbalance in the volume of traded products is the major contributor Trade volume was the main driver for the increase of embodied emissions

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ΔGEQ =

∑ wi ln( i

ΔGETS =

∑ wi ln( i

ΔGEEEI =

Qiex ) Qiim TSiex ) TSiim

∑ wi ln( i

EEIiex ) EEIiim

GEiex − GEiim wi = ln(GEiex / GEiim)

Table 3 Decomposition results of energy-related GHG emissions change (Unit: tonnes).

(12)

(13)

(14)

(15)

Time period

ΔGEQ

ΔGEIS

ΔGEEI

ΔGEES

ΔGE

2000–2003

2.58E+05

4.69E+04

2.00E+06

− 2.47E +04 6.83E+05

1.45E+05

2003–2008

− 1.35E +05 2.45E+05

2008–2011

1.64E+06

2.47E+05

2000–2011

3.90E+06

− 3.35E +04 6.25E+05

− 4.05E +05 − 2.95E +05

− 1.43E +06 − 9.50E +05 − 2.33E +06

1.50E+06

1.90E+06

where subscript i refers to traded commodities, which are divided into 2 types for Macao as goods and services. In Appendix Table A2, No.1–40 and No.50–56 are goods imported, while No.41–49 are services imported. In Appendix Table A3, No.1–20 are goods exported, while No.21–29 are services exported. ΔGEtrade is the difference between GHG emissions embodied exports ( ΔGE ex ) and imports ( ΔGE im ). ΔGEQ , ΔGETS and ΔGEEEI represent the trade imbalance effect, trade structure effect and emission intensity effect, respectively. 3.5. Data sources The fossil fuel consumption data can be derived from Macao Yearbook of Statistics [1,4,56–65], while the imported electricity and MSW incineration are taken from CEM Annual Report [66–77]. The emission factors of fuel energy are illustrated in Appendix Table A4, which are obtained from IPCC. Emission intensity of incineration of MSW can be derived from He et al. [78]. Meanwhile, the embodied emission intensities of imported/exported goods and services are shown in Appendix Tables A5 and A6 acquired from previous studies [79,80].

Fig. 2. Industry structure variation in Macao.

witnessed rapid economic growth with an average annual growth rate of 14.3% during 2000–2011. Industry structure effect has witnessed a variation in the accounting period, shifting from negative in 2000–2003 to positive in 2003–2008, followed by negative in 2008–2011. To some extent, the variation of ΔGEIS is consistent with the change of industry structure (although not fully consistent). As shown in Fig. 2, secondary industry, characterized by higher energy use and larger GHG emissions, decreased from 14.7% in 2000 to 12.0% in 2004. Two years later the share of secondary industry reached the pinnacle at 19.8%, and then it tended to decrease in the following years and dropped into 6.4% in 2011. Energy intensity effect changed from positive in 2000–2003 to negative in 2003–2008 and 2008–2011, accumulatively made the major inhibitor in 2000–2011. Measured by the ratio of energy use and GDP, the decline of energy intensity often implies the improvement of energy use efficiency. Energy intensity in Macao decreased insignificantly from 0.38 to 0.10 Tj/Million MOP. Accumulatively, 2.33E+06t GHG emissions reduction, which were 20% more than that of total GHG emissions changes, were caused by energy intensity decline. Moreover, energy intensity effect can be further decomposed to investigate the underlying impacts of secondary and tertiary industry. The GHG emissions inhibiting effect stemming from energy intensity decrease of secondary industry were responsible for over half of the total reduction effect attributed to energy intensity decrease. Improvement on energy use efficiency of the secondary industry played a crucial role in curbing energy-related GHG emissions during 2000–2011. Although energy intensity of tertiary industry was much smaller than that of secondary industry, reduction potential of tertiary industry can’t be neglected for its dominant role in Macao's economy. The thriving gaming industry and tourism led to energy-intensive casinos and emission-heavy vehicles. Energy structure played an important role in contributing GHG emissions growth in Macao. Energy consumption structure was portrayed in Fig. 3. Fuel oil, which was utilized for electricity generation, was the dominator of Macao's energy consumption in early years. To optimize the energy structure, natural gas, a less pollution-intensive energy resource, has been introduced to take the place of fuel oil since 2008. Therefore, fuel oil has gradually lost its share of total energy

4. Results and discussions 4.1. Driving factors for energy-related GHG emissions change As shown in Fig. 1, energy-related GHG emissions in Macao more than doubled during 2000–2011, increasing from 1.84E+06 t CO2 e. to 3.83E+06t. However, GHG emissions witnessed a decline in 2009 partly due to the financial crisis. The decomposition results of GHG emissions change are presented in Table 3. In general, economic scale and energy structure were the promoting factors for GHG emissions change, of which the economic scale contributed the most. Meanwhile, energy intensity was the major inhibiting factor, followed by industry structure. However, the contributing and inhibiting factors may vary in the different accounting periods. The economic scale effect was consistently positive, which occupied the first position in contributing to the increasing of GHG emissions in all the three accounting periods. According to the decomposition results, ΔGEQ , which denotes GHG emission changes caused by economic growth, was increased by 3.90E+06t in the accounting period of 2000–2011, accounting for 210% of the total GHG emissions change. Since the transfer of its sovereignty to China in 1999, Macao has

Fig. 1. Energy-related GHG emissions in Macao.

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incredible growth of GHG emissions. Notably, exports contributed to the remarkable economic trade surplus. This is attributable to the booming exported service, especially the gaming service. According to the statistics, economic value of service exported to other regions/countries increased by 11.2% after the open reform of gaming industry and its ratio to total exports grew from 56.2% to 97.3% in the same period. On top of that, exported GHG emissions have risen as the exported service booms. Opposite to the growing service export, goods export carries less and less weight in Macao's exports. Consequently, GHG emissions embodied in goods exported continued to slump along with the declining recession of Macao's secondary industry (see Fig. 2). Shown by the results, GHG emission embodied in goods exports exerted continuous descending trend, decreasing from 5.77E+05t in 2000 to 2.12E+05t in 2011. By and Large, GHG emissions embodied in imports were consistently larger than that of exports, making Macao a net importer of embodied GHG emissions. However, trade volume imbalance reduced the emission embodied in trade balances, owing to the fact that Macao's exports were almost double the imports (by monetary value). Another influential factor for embodied GHG emissions in trade is the changing trade structure. Shown in Fig. 5 is the GHG emissions embodied in Macao's exports and imports, mainly categorized as goods and services. From the goods point of view, Macao's goods import was dominated by emission-intensive energy such as fossil fuels and electricity, steel and cement. The results show that the total GHG emissions embodied in goods import reached 1.02E+07t in 2011, which was more than two times that of 2000. The fast growing imported goods related GHG emissions were driven by the demand of growing population, ongoing large-scale investment in casinos and hotels, etc. It should be noted that, although total emissions embodied in goods imported experienced striking growth in the period concerned, obvious fluctuation can be witnessed in the period of 2008–2010. The global financial economic crisis was responsible for the emission fluctuation, which has been verified by Li et al. [15,27]. On the contrary, embodied GHG emissions in exported goods showed a declining trend. In 2000, embodied GHG emissions in exported goods were 5.77E+05t, but when it came to 2011, the amount became less than a quarter of that in 2000. The reduction caused by the decreasing garment and footwear exports, which used to be one of the pillars of Macao economy. There are two reasons can explain the change: one lies in the adjustment of Macao's economic policy, which leads to the recession of the secondary industry; the other is the competition of garment exports from mainland China, which accelerate the decline. As Macao's import of emissionintensive goods are much more than export, GHG emissions embodied in imported goods are also much larger than that embodied in its exports. As the goods import kept increasing while export kept decreasing, the gap between these two types of emissions became wider and wider. Service trade shows a different picture of goods trade. GHG emissions embodied in both imports and exports had remarkable increase from 2000 to 2011. GHG emissions embodied in imports increased from

Fig. 3. Energy consumption structure in Macao.

consumption from 62.8% in 2000 to 13.2% in 2011. To satisfy Macao's ever-increasing electricity demand, Macao has imported increasing electricity from mainland China. In 2011, more than 75% of total electricity consumption and two fifths of total energy consumption in Macao are supported by imported electricity [32]. Due to the coaldominant electric power structure in mainland China, imported electricity was embodied with massive GHG emissions, leading to the promoting effect of energy structure for GHG emissions increase. 4.2. Driving factors for imbalance of embodied emissions in trade Fig. 4 shows the three factors’ contribution to the net embodied emissions in Macao's trade from 2000 to 2011. According to the results, emission intensity and trade structure together underlay Macao's net import emissions. Especially, emission intensity was the determinant factor that maintained Macao's GHG emission deficit. On the contrary, trade volume's effect on Macao as a net importer was opposite. It consistently dragged Macao move towards to emission trade balance, as the export kept growing at a fast pace. Macao cannot sustain its socio-economic development without imports (especially imported goods), due to its extremely limited land, lack of local natural resources and special industrial distribution. After the reform of gaming, millions of tourists flooded into Macao, which substantially drove the large-scale construction of casinos, hotels, restaurants and transports. The construction requires massive energy and emission-intensive products such as steel, mineral metals and cement, while Macao has no factories to produce these goods. Therefore, Macao needs to turn to imports to meet its huge demand for these emissionintensive products. Additionally, Macao's demand for food, water and energy also kept expanding along with the growing population and vanishing agriculture. In a word, Macao is thirsty for food, water, natural resources and industrial goods which are the daily necessities for people's daily lives as well as economic development. In the period concerned, the economic value of Macao's imports surged from 28,861.3 to 156,987.3 Million MOP, which greatly resulted in the

Fig. 4. Driving factors for imbalance of emissions embodied in trade.

Fig. 5. GHG emissions embodied in goods and services of imports/exports.

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relief for low carbon products imports, which will encourage local consumers to choose low carbon products. Moreover, a low carbon consumption culture in society should be promoted to make the consumers voluntarily choose low-carbon products. The current study has constructed a comprehensive framework to identify the driving forces of GHG emissions by an urban economy as embodied in internal energy consumption and external trade, which can be applied for other urban economies. Besides, some improvements can be achieved in the future research. For example, the embodied emission intensities of a specific year are applied to evaluate the long time serial results, lowering the credibility of the results. Therefore, by using the latest time serial multi-regional input-output database such as Eora [83], WIOD [84] and GTAP [85], the time serial embodied emission intensity database can be updated. Moreover, the driving forces can also be identified and explained from another perspective by using the regression model in econometrics.

3.58E+05t in 2000 to 3.77E+06t in 2011. Meanwhile, GHG emission embodied in exports surged from 1.49E+06t to 1.26E+07t, mainly owing to the prosperous gaming. Contrast to goods trade, the quantity of GHG emissions embodied in service imports were much smaller than that of exports, the latter was about 3–4 times the former. Integrating the effect of exports and imports structure, it is found that trade structure as a whole had a positive effect on Macao's role as a receiver of GHG emissions deficit. This finding reflects the nature of Macao, which is heavily dependent on imported goods and exported services. Embodied GHG emission intensity, defined as the amount of overall GHG emissions induced by per unit output (usually GDP), was also a vital factor that drove the trade imbalance. Apparently, the emission intensity of imports, imported goods in particular, was several times that of Macao's exports. The major part of Macao's imports come from mainland China. For instance, 100% of the imported electricity is bought from adjacent Guangdong Province. As well known, mainland China's electricity is mainly generated by coal-firing power plant, which is characterized as carbon-intensive. Moreover, a considerable goods produced by mainland China are with large volume GHG emissions while low value-added. Commodities from mainland China with these two features can be translated into high GHG emission intensity. Compared to the imports, Macao's exports have much lower emission intensity. That is because Macao's exports are dominated by service, which usually can gain higher economic profit at a cost of relatively lower emissions. Another important reason is that the primary energy consumed by Macao is natural gas and oil, which emits less GHG emissions than coal to produce the same amount of power/heat.

Acknowledgement The research is supported by the National Natural Science Foundation of China (Grant no. 71704060), the Natural Science Foundation of Hubei Province (No. 2016CFB132) and the Fundamental Research Funds for the Central Universities, HUST (No. 2016YXMS043 and No. 2016YXZD007). Appendix A. Supporting information Supplementary data associated with this article can be found in the online version at http://dx.doi.org/10.1016/j.rser.2017.10.063.

5. Policy implications and conclusions References This study conducts the LMDI decomposition of energy-related GHG emissions change and the imbalance of trade-related emissions for Macao, as well as reveals the underlying driving forces. This study is considered to be the first decomposition analysis for Macao, which provides instructive policy implications for energy conservation and emission reduction. The fast economic growth due to the booming gaming industry is the major contributor to energy use and GHG emissions in 2000–2011. As the secondary industry gradually slips into recession, service industry will become more and more important for Macao's economy. Though having relatively low emission intensity, service industry in Macao still has large emission reduction potentials as its dominant role in Macao's exports. The service industry, including gaming industry and tourism in Macao, requires an increasing number of casinos, hotels, shopping malls and transportation. Therefore, it is necessary to improve the building's energy efficiency and thus reduce its GHG emissions. For example, Macao government can formulate some preferential policies to encourage the investment of green building construction and establish a censorship to audit the energy use efficiency of the buildings. Moreover, integrated policies such as improving the public transportation, enhancing the minimum emission standards and promoting new energy vehicles can be implemented to control the vehicular GHG emissions. Macao has introduced natural gas to optimize its energy structure since 2008. However, energy structure effect still contributed to GHG emissions in the 2000–2011 accumulatively. The main reason lies in the increasing imports of electricity from mainland China, which is mostly generated by coal-fired power plants with high CO2 emission intensity. Given these, Macao should further optimize the energy structure, such as promoting solar energy utilization in Macao [81]. Moreover, Macao could devote more capital investment in mainland China to greening its electricity generation [82]. The embodied emissions intensities of imports are much larger than that of exports, contributing a lot to the imbalance of GHG emissions embodied in trade. Therefore, Macao government could provide tax

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