Why SOx Emissions are high in China?

This paper examined the factors that attributed to the high emissions of SOx in China with respect to the size of its economy. Although SOx emissions in China, is 70 times larger than that in Japan, the above difference is reduced to about 17 times when the evaluation problem relating to the exchange rate is taken into consideration. Our factor analysis based on the open input-output model estimated the reduction in SOx emissions in China by substituting in the various Japanese coefficients in the simulation. Firstly, for the effects of final demand pattern, our results showed that contrary to the hypothesis that the share of capital formation with high energy intensity is low in matured economy, SOx emissions increase when China is assumed to have the same goods and services composition as Japan. Emissions increase are recorded in industries such as electricity, iron & steel and transport equipment. Secondly, although China, has a lower dependency on imports than Japan, the import coefficients for sectors with high energy consumption and high SOx emissions such as electric power, cement, iron & steel, machinery and transport equipment are larger in China. We also found no evidence to support the hypothesis that SOx emissions are higher in China as Japan exports more manufacturing products. Thirdly, with regards to the effects of the production sectors, our analysis revealed that the reduction in SOx emissions are large when the Japanese input per unit from the energy sectors are applied and when sulphur content in energy is reduced in China. However, as China is abundant in coal, it is unlikely that China will switch its energy inputs to petroleum, Hence increasing energy efficiency and increasing the removal of SOx in China are the major policy alternatives available.