China's current carbon inequality is predominantly determined by capital disparity

Abstract

The responsibility for carbon emissions is unequally distributed among socioeconomic groups due to consumption and wealth inequality. Examining carbon inequality is crucial for achieving fair and just climate mitigation. As the world largest carbon emitter, China has been the focus of numerous studies on carbon inequality. However, most of these studies have primarily concentrated on the inequality of household consumption-related emissions, overlooking the nation's largest carbon emission category: capital formation. In this study, we investigate national and provincial carbon inequality in China among income groups, involving three consumption-based emission categories: household consumption, government spending, and capital formation-related emissions. The results reveal that the top 20 % of urban residents, comprising 9.7 % of the population, are responsible for 33 % of the capital formation-related carbon emissions. In contrast, the lowest 20 % of rural residents, accounting for 8.6 % of the population, contribute only 2 % of such emissions. The carbon inequality associated with capital formation is significantly larger than that of household consumption in almost all provinces. Further decomposition analysis shows that carbon inequality in capital formation is the dominant contributors (more than 60 % in 24 out of 29 provinces) to China's overall carbon inequality. These findings suggest that reducing carbon emissions and addressing inequality should focus on the capital/investment of the high-income groups.