Application of the sustainable system-of-systems approach and econometric analysis to address China's decarbonisation problem

The Sustainable system-of-systems (SSoS) approach, complemented with econometric analysis was used to address China's decarbonisation problem, i.e. selecting fossil fuel consumption sources to be reduced in various regions to meet CO2 reduction targets with minimal effect on population and economic growth. In the SSoS, the micro-level system is represented by residents' health expenditure, the meso-level system by industry's CO2 emissions intensity, and the macro-level system by the government's achievement of economic growth. Regional panel data from 2009 to 2019 were used in an econometric analysis conducted using structural equation modelling. The results show that health expenditure was affected by CO2 emissions from the consumption of raw coal and natural gas. To support economic growth, the government should reduce raw coal consumption. For CO2 emissions reduction, industry in the eastern region should reduce raw coal consumption. The key advantage is SSoS with econometrics offers a way to reach a common goal among stakeholders.Practitioner summary: This research shows that the use of the SSoS approach, complemented with an econometric analysis of key social, economic, and natural capital data, can address a complex decarbonisation problem facing a nation (China, in the present case) while considering the goals of all stakeholders (the government, industrial communities, and residential communities).