The CO2 Emissions Drivers of Post-Communist Economies in Eastern Europe and Central Asia

Abstract

CO2 emissions have become a key environmental contaminant that is responsible for climate change in general and global warming in particular. Two geographical groups of countries that previously belonged to the former bloc of socialist countries are used for the estimations of CO2 emissions drivers. The research covers such Eastern European countries as Bulgaria, Czech Republic, Hungary, Russian Federation, Poland, Romania, Slovak Republic, and Ukraine and such Central Asian states as Kazakhstan and Uzbekistan during the period 1996–2018. The main goal of the research is to identify common drivers that determine carbon dioxide emissions in selected states. To control for the time fixed effects (like EU membership), random effect model was used for the analysis of the panel data set. Results: It is found that energy efficiency progress reduces per capita CO2 emissions. Thus, an increase in GDP by 100 USD per one ton of oil equivalent decreases per capita CO2 emissions by 17–64 kg. That is, the more energy-efficient the economy becomes, the less CO2 emissions per capita it produces in a group of selected post-communist economies. Unlike energy efficiency, an increase in GDP per capita by 1000 USD raises CO2 emissions by 260 kg per capita, and the richer the economy becomes, the more CO2 emissions per capita it generates. The increase in life expectancy by one year leads to an increase in CO2 emissions per capita by 200−370 kg, with average values of 260 kg per capita. It was found that an increase in agriculture, forestry, and fishing sector share (as a % of GDP) by one percentage point leads to the decrease in CO2 emissions by 67–200 kg per capita, while an increase in industrial sector share by one percentage point leads to the increase in CO2 per capita emissions by 37–110 kg. Oil prices and foreign direct investment appeared to be statistically insignificant factors in a group of selected post-communist economies. Conclusions: The main policy recommendation is the promotion of energy efficiency policy and the development of green economy sectors. The other measures are the promotion of a less energy-intensive service sector and the modernization of the industrial sector, which is still characterized by high energy and carbon intensity.