LAUSR

To put the brakes on global climate change, China, the world's top emitter, has established ambitious CO2 emissions reduction targets. Industry-level emissions analysis can help policymakers determine better ways to achieve mitigation targets. This study is the first to target the total-factor carbon emission performance (TCPI) of secondary and service industries. We first compile industry-level CO2 emission inventories of 25 Yangtze River Delta cities during 2007-2016. The TCPI of secondary and service industries is then estimated by the non-radial directional distance function. We then compare the TCPI of the two industries across levels, dynamics, and inequalities using a global metafrontier approach. The results show the TCPI of the service industry (0.563 in 2016) was significantly higher than that of secondary industry (0.256 in 2016), suggesting that the service industry was more carbon-friendly. The TCPI gap between the secondary and service industries narrowed over the study period. The TCPI of secondary industry showed a promising increase during 2007-2016 with an annual growth rate of 2.30%, reflecting the positive effects of the government's reforms and environmental regulations. By contrast, the service industry saw a downward trend in TCPI, decreasing by 1.68% annually, primarily because it is a newcomer to low-carbon development. TCPI inequality in secondary industry was much larger than in the service industry, suggesting that significant heterogeneity exists in secondary industry. Therefore, policymakers should implement targeted mitigation policies for secondary industry, and place decarbonising the service industry on the agenda to reverse its decreasing TCPI.