sector is divided "state owned" and "non-state owned" firms in order to clarify the difference of their attitude concerning production or employment. The results of the forecast indicate that China will keep high economic growth of 8-10% per year for the next ten years. China will thus be, at the beginning of the next century, a huge $ CO_{2} $ emitting country compared to the United States in the year 1990 if no measures are taken for energy efficiency improvement. And, to make matters worse, $ CO_{2} $ emissions will increase more if the final demand structure gets modernized like developed countries.

## Applications of Input-Output Approach in Environmental Analysis - A Study of Scenario Leontief Inverse -

How much $ CO_{2} $ is emitted through the production and consumption of goods & services? To answer this question we can calculate it precisely by using the open input-output model. And there is another question. How much emission of $ CO_{2} $ will be reduced when we change the industrial structure of our country? It is not adequate to use the open input-output model to answer this question. In the open input-output model, it is supposed that an activity produces only one product, and that inputs are not substitutable. In practice, many activities produce more than two products, including scraps and wastes. Many types of energy are used in an activity, and some of them are substitutable. This is the reason the open input-output model is not adequate for this case. We then made a model named the 'scenario Leontief' model. In this model, we need not assume that an activity produces one output, and that inputs are not substitutable. The primary purpose of this paper is to explain our 'scenario Leontief' model.

About 1.0-1.5 billion tons of $ CO_{2} $ are emitted annually from the economic activities in our country. (The emission of $ CO_{2} $ is measured by the weight of $ CO_{2} $ , not by the weight of carbon). 25 percent of them are emitted from the electric power industry, 10 percent from the steel industry, and 7 percent from the cement industry. These three industries are the top three highest in $ CO_{2} $ emission rank. It is important to improve emissions of $ CO_{2} $ from these three industries, all of which mysteriously depend on each other. First, the remaining heat and waste gas from the cement and steel industries can be used in electric power generation. Second, effective uses of ash from the coal-fired power generation plant and slag from the blast furnace can reduce the emission of $ CO_{2} $ in the cement industry. The emission of $ CO_{2} $ in the cement industry mainly comes from using limestone. In the cement producing process, calcium carbonate ( $ CaCO_{3} $ ), the main component of limestone, decomposes into calcium oxide (CaO) and $ CO_{2} $ . We can reduce the amount of limestone by using ash and slag in the cement industry, and at the same time reduce the emission of $ CO_{2} $ coming from limestone. Third, recycling of scrap iron will increase electric power demand in the electric furnace to melt scrap iron. The electric power, steel, cement industries use byproducts and scrap from each other. We applied the 'scenario Leontief' model to explain the interdependence among these three industries. We simulated the model.