Unveiling the unequal variation of regional carbon risk under inter-provincial trade in China

Development and emissions reduction are key conflicts that China needs to balance under the "dual-carbon" goal. The risk of potential output loss due to limiting economic growth by carbon emission stress will be further propagated through the trading system. This study evaluated the level of regional carbon risk by constructing a carbon risk index, then quantified the transfer of carbon risk under interprovincial trade based on the multiregional input-output model, and ultimately revealed the unequal changes of carbon risk between provinces. The results show that the level of carbon risk was consistently higher in Northwest China (Inner Mongolia, Ningxia, Xinjiang) and North China (Shandong, Hebei) during 2007-2017. There was an inequality between interprovincial embodied carbon flow and carbon risk transfer, which made the sum of net carbon risk imports across provinces positive rather than zero. In addition, the risk-transfer value matrix identified helps to underpin mitigation actions across provinces, and the inter-provincial trade with a lower risk-transfer value needs to be improved. Furthermore, the continued increase of carbon risk in some less developed regions, such as Inner Mongolia, was found to be difficult to reverse, making it important to reduce emissions from the production side in order to minimize risk.