Transportation Research Part D 13 (2008) 298305

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Transportation Research Part D

journal homepage: www.elsevier.com/locate/trd

A system dynamics model of CO2 mitigation in Chinas

inter-city passenger transport
Ji Han *, Yoshitsugu Hayashi
Graduate School of Environmental Studies, Nagoya University, Furo-cho, Chikusa-ku, Nagoya 464-8603, Japan

a r t i c l e
Keywords:
CO2 mitigation
Policy assessment
System dynamics
Sensitivity analysis
China

i n f o

a b s t r a c t
Mitigation of greenhouse gas emissions from transportation has become increasingly
important and challenging especially for developing countries. This paper takes the
inter-city passenger transport in China as a case, and develops a system dynamics model
for policy assessment and CO2 mitigation potential analysis. It is found that the future
demand for Chinas inter-city passenger transport is expected to be large, with the turnover
volume growing at a rate of 9% per annum and amounting to 6600 billion p-km in 2020.
Major emissions reduction potential exists in inter-city passenger transport. In 2020, comparing to the case without any specic policies stressing mitigation, the reduction of CO2
emissions ranges from 26% to 32% under those scenarios with policy controls. Sensitivity
analysis reveals that the CO2 mitigation will be best achieved by accelerating the development of railway network, together with slowing down the extension of highway network
and imposing fuel taxes.
2008 Elsevier Ltd. All rights reserved.

1. Introduction
Transportation is a major consumer of energy together with its associated greenhouse gas (GHG) emissions and one of the
most difcult sources to control. In 2004, transport accounted for 26% of worlds energy use and 23% of energy-related GHG
emissions (International Panel on Climate Change, 2007). In developing countries, involvement in globalised trade and rising
income levels are increasing levels of motorization, with the result that energy use is increasing faster than that in developed
nations, and is projected to grow from 31% in 2002 to 43% of global transport energy use by 2025 (International Panel on
Climate Change, 2007). This growth is especially pronounced for China that has one of the most rapidly growing economies
and is the second largest energy consumer, just behind US. Its annual GDP grew at about 10% per annum during the last two
decades and its energy consumption in 2000 was about 1300 Mtce, equivalent to 20% of Organisation for eEconomic Cooperation and Development nations use and a tenth of world consumption. As the second largest CO2 emitter in the world,
China is under pressure to mitigate emissions.
Based on international cooperative research, the World Conference on Transport Research Society and Institute for Transport Policy Studies (2004) analyzed the current situations of urban transport and the environment, and summarized the related strategies and policies for improving the local and global environment. Tsamboulas et al. (2006) assessed the potential
of a specic policy measure to produce a modal shift in favor of intermodal transport on a European scale while Vieira et al.
(2007) looked at the concept of multi-instrumentality as a systematic approach for transport policy integration and implementation. May et al. (2000) recommended a set of indicators and target functions, and evaluated sustainability of transport
policy through questionnaire investigation. Relevant research of Chinas transport issue has also been carried out in the past

* Corresponding author.
E-mail address: hanji@urban.env.nagoya-u.ac.jp (J. Han).
1361-9209/$ - see front matter 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.trd.2008.03.005

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J. Han, Y. Hayashi / Transportation Research Part D 13 (2008) 298305

decades. Mao and Chen (2001) established a model framework for evaluating the sustainability of transport policy and Wang
et al. (2007) reviewed recent environmental policies relating to the automobile industry employing a bottom up approach to
estimate different CO2 inventories for development strategies in Chinas road transport. These studies provide insights for
understanding policy options and dynamics of CO2 emissions in transport sector. However, most of them rely on theoretical
abstraction and qualitative analysis.
On the other hand, as an important tool supporting policy experiments, system dynamics (SD) methodology can not only
arrange and describe the complicated connections among each element at different levels, but also deal with dynamic process with feedback in social systems. Moreover, it can predict the complex system change under different whatif scenarios, which is useful in examining and recommending policy decisions (Mohapatra et al., 1994). During the recent years, SD
model has been applied extensively to a number of studies related to the policy assessment and environment, such as sustainability evaluation (Chen et al., 2006), solid waste management (Karavezysis et al., 2002), simulation of the reduction of
CO2 emissions in the residential sector (Kunsch and Springael, 2008), water resource planning (Zhang et al., 2007), and environmental planning and management (Guneralp and Barlas, 2003).
2. System dynamics model and data
Here the inter-city passenger transport system has railway, highway and waterway modes, with civil aviation omitted
because of data limitation. The modes can be used in sequence and/or as alternatives. The aim is to look at the distribution
of the expected growth by mode under several policy scenarios and the external impacts of transport development on nonrenewable energy use and greenhouse gas emissions.
Various policy developments will have environmental repercussions that can help meet goals of energy saving, mitigation
of CO2 emissions, and the reduction of local environmental pollution. Fig. 1 shows the relationships between goals, policies
and effects in our dynamic model. The dynamics are determined by feedback loops with each arrow indicating the inuence
of one element on another. The inuence is considered positive (+), if an increase in one element causes an increase in another or negative (). A broken line indicates an incentive relationship. The base year is 2000, with 2004 used for validation,
and 2020 is set as the target year.

Cumulated
passenger capacity

Regulations/
plans

Transport
policy
Economic
measures

Traffic network
length
Cost per
transport unit

+
Passenger transport
demand

Modal share

+
Environmental
impacts

Other
factors
Planning goals

Fig. 1. Causal loops of the system dynamics model for inter-city passenger transport.

Capacity change

Passenger transport
demand change

Adjustment parameter

Transport
policy options

Cumulated passenger
capacity

Network growth

Time trend variable

Traffic network
extension rate

Passenger transport
demand
Passenger transport
growth rate

Traffic network length

Modal share

Fuel price
Fuel tax rate
Fuel cost

Passenger transport by
each mode

CO2 emissions unit

Fuel cost per transport

unit
Fuel consumption per
transport unit

Fuel consumption

CO2 emissions

Environmental impacts

Fig. 2. Flow diagram of the system dynamics model.

J. Han, Y. Hayashi / Transportation Research Part D 13 (2008) 298305

1600

100
80

1200
1000

60

800
40

600
400

20

Modal share (%)

1400

200

Turnover volume

Railway

Highway

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

0
1980

1978

Turnover volume (billion p-km)

300

Waterway

Fig. 3. Passenger turnover volume and modal share, 19782004.

A ow diagram shows the detailed physical and information ows in model (Fig. 2). The general goals are to reduce fuel
consumption and to mitigate CO2 emissions in inter-city passenger transport. The goals are set in terms of specic parameters such as the trafc network extension rate by mode and the fuel tax rate. Through various preferences and investments
in each modes network expansion, government can change environmentally impacts of the system. Furthermore, fuel tax
has proved useful in inuencing fuel demand and associated CO2 emissions in many countries (Sterner, 2007). The latter
is expected to reduce the fossil fuel depletion and encourage the usage of clean energy. In the system dynamics model, modal
share is assumed determined by cumulated passenger capacity, network length, and the fuel cost per transport unit. A time
trend variable is introduced to reect longer-term trends in modal share not explained by the included variables. In addition,
an adjustment parameter is used to ensure the annual summation of all projected modal shares is 100%, and to represent
those factors inuencing modal share that are difcult quantify (for example, the comfortableness of the passenger vehicle).
Passenger transport demand is usually estimated by one of two methods. One is to extrapolate the historical trend, where
the passenger turnover volume (p-km) is regarded as the explained variable, and population, per capita GDP, vehicle numbers, etc. are the explanatory variables (Haldenbilen, 2006). The other way is to estimate transport demand according to the
national development strategy (Piattelli et al., 2002; Chen et al., 2006). Here, the latter method is used and the growth rate of
passenger volume is in accord with Chinas National Eleventh 5-Year Plan.
For policy assessment and scenario evaluation, historical data from various sources and covering 19782004 is used looking at inter-city passenger turnover volume and modal share, and the factors likely inuencing the latter.
Annual data on inter-city passenger transport and modal split is taken from China Statistical Yearbook (National Bureau
of Statistics, 19962005). Overall over the past three decades, but especially since the economic reform in China, movements
have increased from 172 billion p-km in 1978 to 1453 billion p-km in 2004 an annual growth rate of around 8.6% (Fig. 3)
although the shares of railways and waterways decreased. Before the 1990s, railway transport still had the largest share of
trafc over 50%. More recently, with large amounts of investment in highway and rising car ownership road transport has
played the dominant role in inter-city passenger movement. For example, in 2004, the investment on highway, railway and
waterway were about 337, 65 and 39 billion yuans, respectively, reecting the different priority given to the various modes.
Secondly, annual data on factors affecting modal share from 1978 to 2004 is taken from the Yearbook House of China
Transportation and Communication (19862005), the Price Yearbook of China (Editorial Department of Price Yearbook
of China, 19972005) and China Statistical Yearbook (National Bureau of Statistics, 19962005). Table 1 shows data for
selected years. Although the system dynamics model allows consideration of different types of fuel used by each mode, here,
fuel consumption is all converted to the same type of gasoline because of fuel price data limitations with the conversion
parameter is taken from Chinas Energy Yearbook (National Bureau of Statistics, 2005). In Table 1, the gasoline price gures
are in constant 2000 price.
To assess the role of possible determinants of modal share a linear model is used
MSi;t C i a1;i CAPi;t a2;i NETi;t a3;i FCi;t a4;i T

where i and t denotes transport mode and year; MS is the percentage modal share; CAP is the cumulated passenger capacity;
NET is the network length; FC is fuel cost per transport unit (fuel price times fuel consumption per transport unit); and T is a
time trend taking values 1 through 23 from 1978 to 2000. To allow for excessive multicollinearity among the independent
variables, stepwise regression estimation is used.1 Table 2 shows the results. The adjusted R2 in each case is close to 1.0, which
indicates the linear combination of explanatory variables is sufcient and reliable for modal share estimation.
When projecting the cumulated passenger capacity, we assume the growth rate for each mode follows the historical trend
shown in Table 1. Rail and highway capacities grow at same rate as their network expansions, while for waterways, capacity
is assumed to increase at half of the rate of its network extension.
1

It is recognized that this has very serious technical pitfalls but is easier to interpret than say factor analysis.

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J. Han, Y. Hayashi / Transportation Research Part D 13 (2008) 298305

Table 1
Mode characteristics of inter-city passenger transport in selected years
Modal share
(%)

Railway
1980
1990
2000
Highway
1980
1990
2000
Waterway
1980
1990
2000

Passenger capacity
Volume
(106 people)

Trafc network length

Annual growth
rate (%)

Length
(103 km)

Annual growth
rate (%)

Fuel consumption per

transport unit

Gasoline price
(yuan)

61.7
48.4
40.1

922.0
957.1
1050.7

1.89
0.37
2.22

53.3
57.8
68.7

1.43
0.27
1.93

66.1 l/(104 t-km)

55.4 l/(104 t-km)
35.1 l/(104 t-km)

2.1
1.5
3.7

32.5
48.5
59.0

2300.0
7600.0
13290.0

3.77
4.53
5.07

883.3
1028.3
1402.7

3.21
4.24
5.67

12.8 l/(102 t-km)

12.2 l/(102 t-km)
11.0 l/(102 t-km)

2.1
1.5
3.7

5.8
3.1
0.9

264.4
272.3
193.9

0.53
1.29
0.23

108.5
109.2
119.3

0.18
0.46
0.14

10.9 l/(103 t-km)

9.9 l/(103 t-km)
8.4 l/(103 t-km)

2.1
1.5
3.7

Table 2
Determinants of modal share in inter-city passenger transport 19782000
Railway
Coefcient
Transport capacity (CAP)
Network length (NET)
Fuel cost per unit (FC)
Time trend variable (T)
Constant (C)
Adjusted R2
F-value

0.004
0.296
0.035
1.077
43.300
0.99
501.00**

Highway
t-Value
1.92
3.99**
6.55**
15.96**
8.16**

Coefcient
0.0002
0.004
0.139
0.226
48.807
0.99
668.57**

Waterway
t-Value
1.82
1.83
2.06
4.12**
16.69**

Coefcient
0.002
0.016
0.024
0.071
1.213
0.98
361.87**

t-Value
2.34*
3.83**
1.79
7.91**
2.10*

Signicance: 5% and **Signicance: 1%.

3. Transport policy and scenario design

Table 3 lists the relevant policies, regulations and criterions put in place in China since the 1980s to control energy consumption and greenhouse gas (GHG) emissions. More intensive transport policies have been implemented with general targets aimed at encouraging the use of light vehicles and public transport, and improving fuel economy. The Eleventh 5-Year
Plan goes further and stresses that GHG emissions need controlling. Between 2006 and 2010, the annual growth rate of passenger trafc growth is supposed to be 9.1% (Wu, 2006). Here we assume the growth rate for 20112015 and 20162020 will
be 10% and 11%. As far as the infrastructure networks are concerned, the plan sets forth the priorities to accelerate the development of railway transportation to improve the road network; and to further develop waterways. In the period 20062010,
an 0.092 million km of railway, 2.3 million km of highway, and 0.13 million km of inland waterways is planned.
In China, although yet to be been implemented, the central government enacted fuel tax legislation in 1999 with tax rate
expected to range from 30% to 50% when enacted (Zhang, 2006). Therefore, when assessing the effect of transport policies on

Table 3
Transport policies concerning energy conservation and GHG mitigation
Date

Issuer

Policy/regulation/criterion

01/08/1986
01/06/1992
15/07/1997

Ministry of Railways
Ministry of Transportation
State Planning Commission, State Economic
and Trade Commission, etc.
Ministry of Railways
General Administration of Quality and
Technology supervision
Ministry of Transportation

Provisional Detailed Rules on the Management of Energy Conservation in Railways

Rules for the Publication of Energy Conservation Products of Automobiles and Vessels
Standards for the scrapping of motor vehicles

09/07/1999
01/01/2000
16/06/2000
01/06/2002
25/11/2004

Ministry of Railways
National Development and Reform
Commission

Policy on Energy Conservation Technologies in Railway

Limits for Automobile Emission of Pollutants and Their Testing Method
Detailed Rules on the Implementation of Energy Conservation Law in the Transportation
Industries
Criterions on Energy Conservation in Railway Engineering Design
Mid- and Long-term Specic Plan on Energy Conservation

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J. Han, Y. Hayashi / Transportation Research Part D 13 (2008) 298305

BAU (Business As Usual) Scenario

Mitigation of energy consumption and

CO2 emissions 2000-2020

Extension of historical trend in traffic network growth

Railway: 2.0% Highway: 7.5% Waterway: 0.8%
No levy of fuel tax

Middle Control Scenario

Priority in traffic network growth (11th Five-Year Plan)
Railway: 5.2% Highway: 4.5% Waterway: 1.4%
Levy of fuel tax
45% of fuel cost

High Control Scenario

More inclined priority in traffic network growth
Railway: 6.0% Highway: 4.0% Waterway: 2.0%
Levy of fuel tax
50% of fuel cost
Fig. 4. Mitigation scenarios for inter-city passenger transport.

CO2 emissions mitigation, fuel taxation needs inclusion. Based on the analysis of past transport policies and existing studies,
three scenarios are established (Fig. 4).
Generally, the business and usual (BAU) scenario extrapolates historical trends and assumes the trafc network will
increase at the average rate for 20002005. The middle control scenario is based mainly on the Eleventh 5-Year Plan embracing policies emphasizing energy conservation and CO2 mitigation by accelerating railway and waterway construction and
introducing fuel tax rate at 45%. In the high control scenario, more intensive policies are implemented concerning the environment, notably that the government will invest heavily in infrastructure construction giving more priority to railway and
waterway while slowing the pace of highway expansion Furthermore, a fuel tax rate to 50% is assumed.

billion p-km
7000

Passenger turnover volume

6000

75

5000

60

4000

45

3000

30

2000

15
0
2000

1000
0
2000

%
90

2004

2008

2012

2016

2020

Modal share (middle control)

%
90
75

60

60

45

45

30

30

15

15
2004

Railway

2008

2012

Highway

2016

Waterway

2020

2004

2008

Railway

75

0
2000

Modal share (BAU)

%
90

0
2000

2012

Highway

2016

2020

Waterway

Modal share (high control)

2004

Railway

2008

2012

Highway

Fig. 5. Inter-city passenger turnover volume and modal share in 20002020.

2016

Waterway

2020

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J. Han, Y. Hayashi / Transportation Research Part D 13 (2008) 298305

4. Results
Fig. 5 presents the projected trends in passenger trafc and modal share to 2020. It shows that trafc volume will touch
6600 billion p-km at the end of 2020, with an annual average growth rate around 9%. Under the BAU scenario, highways
contribute the most to trafc growth with its share increasing 15% points between 2000 and 2020. Under the middle and
high control scenarios, the introduction of specic policies aiming at energy conservation and CO2 mitigation supports environmentally friendly modes such as railway and waterway, while the highways share is reduced because its relatively high
energy consumption and CO2 emissions. For example, in the high control scenario, the share of railways becomes the single
largest mode by 2020 although waterways only enjoy 0.2% of trafc in 2020.
Since the fuels consumed in transport are converted to gasoline according to their equivalent heat volume, Eq. (2) is used
for estimating CO2 emissions based on the revised 1996 guidelines for national GHG inventories provided by the International Panel on Climate Change (1997).
"
#
X
44
2
EMt
PKMt  MSi;t  FUi;t  a  b  c 
12
i
where subscripts i and t denote transport mode and year; EM is CO2 emissions from inter-city passenger transport; PKM is
the volume of passengers; MS is modal share; FU is the fuel consumption per transport unit, which is assumed to remain the
same as in 2000; a is heat conversion factor for gasoline taking values for 3.2  107 J/L; b is a carbon emission factor per unit
heat generation, which is 18.9 kg-carbon/billion-J; c is the proportion of carbon oxidized, estimated at 99%.
Fig. 6 illustrates the scenarios in terms of energy consumption and CO2 emissions both of which will increase for intercity passenger transport up to at least 2020 even if the proposed policies are implemented. However, the effects of the policies on energy conservation and CO2 mitigation are positive. Specically, under the BAU scenario, historical patterns are assumed to continue in the future and there is no specic policies stressing CO2 mitigation. Energy consumption in 2020 is
projected to reach 11.9  106 trillion Joules, which is more than seven times the 2000 level. CO2 emissions also record a same
sharp increase and total 819 million tons in 2020. In middle and high control scenarios, emphases are laid on the adjustment
of transport structure and introduction of higher fuel taxes. With greater priority attached to the development of rail and
waterways, and higher fuel taxes, in 2020, energy use under the middle and high control scenarios is projected to be
8.8  106 and 8.0  106 trillion Joules, respectively, and CO2 emissions to fall by 26% and 32% compared to the BAU scenario.
5. Model verication and sensitivity analysis
To verify the system dynamics model in projecting passenger volume, modal share and CO2 emissions historical statistical
series for 20012004 are used to allow comparisons with the BAU scenario. Table 4 shows the results, for all variables have
errors under 10%. They indicate model is reasonable.
106 TJ
14

CO2 eimssions

Million tons
900

Energy consumption

12

750

10

600

450

300

150

2
0
2000

2004

BAU

2008

2012

Middle Control

2016

2020

0
2000

High Control

2004

BAU

2008

2012

Middle Control

2016

2020

High Control

Fig. 6. Projections of energy consumption and CO2 emissions in 20002020.

Table 4
Verication of model results
Year

Turnover volume (1012 p-km)

CO2 emissions (106 tons)

Modal share (%)

Railway

2001
2002
2003
2004

Highway

Waterway

E (%)

E (%)

E (%)

E (%)

E (%)

1.2
1.3
1.3
1.5

1.2
1.3
1.4
1.5

0.4
1.1
9.4
3.0

39.5
38.7
38.2
39.3

39.6
38.8
38.0
37.8

0.3
0.4
0.4
3.9

59.7
60.7
61.3
60.2

59.7
60.5
61.4
61.7

0.1
0.3
0.2
2.5

0.7
0.6
0.5
0.5

0.7
0.7
0.5
0.5

4.8
5.6
5.8
7.6

134.9
140.0
152.9
164.3

124.2
134.8
146.2
158.7

7.9
3.7
4.4
3.4

Note: A, actual data; M, model result; E, relative error. Actual CO2 emissions is also calculated from Eq. (2) using data for 2001 to 2004.

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J. Han, Y. Hayashi / Transportation Research Part D 13 (2008) 298305

Sensitivity value (%)

3
1.5
0
-1.5
-3
-4.5
-6
-7.5
-9
fuel tax rate

railway
network
growth rate

highway
network
growth rate

waterway
network
growth rate

Fig. 7. Sensitivity analysis of policy parameters.

The policy parameters explored include trafc network expansion (railway, highway and waterway) and the fuel tax rate.
However, some parameters may have a greater effect on CO2 mitigation than others, thus the sensitivity analysis of each policy parameter is examined using the following equation:

DEMt DX t
3
S
EMt
Xt
where S is the sensitivity of a specic parameter in year t; EM is CO2 emissions; X is policy parameter inuencing CO2 emissions; DEM and DX are the increments or decrements of CO2 emissions (EM) and parameter (X).
We assume each parameter will increase by 10% every ve years during 20012020. Using Eq. (3) generates four sensitivity values for each parameter and uses their average values to represent the general sensitivity of the parameter to CO2
emissions (Fig. 7). The highway networks growth rate is sensitive to the increase in CO2 emissions, while the other three
parameters are sensitive to reductions. Moreover, when considering the absolute value of sensitivity, the growth rate of
the railway network, growth rate of highway network and fuel tax rate are the most sensitive that order.
6. Conclusion
Looking at inter-city passenger transport in China, and using a system dynamics model for policy assessment and CO2
mitigation scenario analysis, we nd that accelerating the development of railway network is the most effective option Slowing down highway network extension and levying fuel taxes are also signicant and useful policies for CO2 mitigation.
Acknowledgements
This research was supported by the Grant-in-Aid for JSPS Fellows (No. 1907397). The authors express great appreciation
to the anonymous referees who provided valuable suggestions that led to an improved manuscript.
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