China has achieved notable success in developing its economy with approximate 10 percent average annual GDP growth over the last two decades. At the same time, energy consumption and CO2
emissions almost doubled every five years, which led China to be the world top emitter in 2007. In response, China’s government has put forward a carbon mitigation target of 40%–45% reduction of CO2
emission intensity by 2020. To better understand the potential for success or failure of such a policy, it is essential to assess different driving forces such as population, lifestyle and technology and their associated CO2
emissions. This study confirms that increase of affluence has been the main driving force for China’s CO2
emissions since the late 1970s, which outweighs reductions achieved through technical progress. Meanwhile, the contribution of population growth to CO2
emissions was relatively small. We also found a huge disparity between urban and rural households in terms of changes of lifestyle and consumption patterns. Lifestyles in urban China are beginning to resemble Western lifestyles, and approaching their level of CO2
emissions. Therefore, in addition to the apparent inefficiencies in terms of production technologies there is also a lot of room for improvement on the consumption side especially in interaction of current infrastructure investments and future consumption.