Carbon-intensive Sectors Research Articles

Towards sustainable resource management: The role of governance, natural resource rent and energy productivity

The present study investigates the role of sustainable resource management in empowering emerging seven (E−7) economies for a low-carbon future. It analyzes the interplay between institutional quality, energy productivity, natural resource rent, and their impact on consumption-based CO2 emissions employing the Method of Moment Quantile Regression (MMQR). The findings highlight the pivotal role of institutional quality in mitigating CO2 emissions across quantiles by combating corruption and upholding the rule of law. Sustainable management of natural resource rent allows diversification from carbon-intensive sectors and reduces carbon emissions. The results show that energy productivity has a significant negative influence on carbon emissions as E−7 economies improve energy efficiency and adopt cleaner technologies. The results for GDP show a positive relationship with emissions, while renewable energy consumption has a negative impact, stressing the importance of clean energy promotion. Policymakers in E−7 economies can further stride towards sustainable resource management by improving institutional quality, enhancing energy productivity, and utilizing natural resource rent to mitigate climate change and foster economic growth.

Pricing of climate transition risks across different financial markets

As the global economy transitions towards net zero, it is conjectured that efficient financial markets reflect the risks involved with this transition. This hypothesis is empirically tested in this paper and signals are found of climate transition risk pricing in options, equity and bond markets, based on greenhouse gas emission levels. The analysis of recent developments in the option market suggests that investors perceive the oil and gas sector to have an elevated risk profile. In the equity and bond market for, particularly, the energy sector, investors appear to demand higher returns to compensate for a higher transition risk. In addition, it is found that the average maturity of newly issued bonds in the carbon intensive coal sector decreased, while the average maturity increased strongly in the renewables sector with low carbon emissions. The reduction of investors' long-term exposure to the coal sector signals concerns about its long-term viability, while the opposite is the case for the renewables sector. Nonetheless, it is not possible to conclude that climate risk pricing is consistent, as the statistical evidence is not overwhelming and not fully aligned across different markets. Furthermore, as climate indicators and emission data still contain important flaws, climate pricing based on these indicators could also be inadequate. Therefore, this paper aligns with the literature arguing that climate risk pricing is inconsistent and inadequate and that this is important for investors and risk managers to acknowledge. In addition, policymakers are urged to ensure that transition information, like emission data, is correct, timely and comparable to ensure its information value and usability.

Just “blah blah blah”? Stock market expectations and reactions to COP26

Applying an event study methodology, this research examines whether and how the stock market incorporated the key outcomes and statements from the COP26 summit into share prices. Our study is based on a sample of 7587 firms from four economic areas (EU, USA, China and India) belonging to the most carbon-intensive sectors. The empirical evidence shows that stock market reaction depends on how country authorities respond to commitments to accelerate and scale the transition to a greener economy, confirming that the stock market reacts negatively to stringent climate policies and positively to less stringent regulations. At the same time, in sectors emitting the most pollution, investors tend to reward companies with the best/worst environmental performance according to the type of climate policies adopted, more or less strict. Since finance is expected to play a critical role in the transition to a low-carbon economy, our results have relevant policy implications by highlighting that only clearly-defined, long-term and credible climate-related policies can lead equity investors to adequately consider environmental issues.

Kömürden Çıkış Politikaları ve Kömüre Bağımlı Yerleşim Yerlerinde Adil Dönüşüm

This article presents a discussion of the social consequences of coal phase-out policies determined in the context of addressing climate change and the possibility of a just transition in coal-dependent settlements. Energy production methods are changing all over the world to tackle climate change. This situation will inevitably be reflected in Turkey as well. In this regard, the main purpose of the research is to examine and introduce the just transition, which is a prominent and contemporary approach for possible coal phase-out experiences in settlements that are economically and socially dependent on coal. An overview of climate change and carbon-intensive sectors, coal mining's role in energy production, and coal phase-out policy objectives is presented in the first part of the article. Then, presented in the following are general information about the role of coal in energy production in Turkey, as well as settlements that are economically and socially dependent on coal. After providing an overview of the just transition approach and its objectives, suggestions are made for Turkey in the conclusion. Several measures can be taken to minimize the negative effects on groups involved in coal-dependent settlements and vulnerable groups as a result of possible transformation.

Unconventionally Green: Monetary Policy between Engagement and Conflicting Goals

Abstract We study the potential role of the ECB in supporting the transition to a low-carbon economy by decarbonizing the corporate sector purchase programme (CSPP). We demonstrate that the carbon intensity of CSPP purchases is determined by three main factors: First, by the CSPP-eligibility criteria, as these tend to exclude bonds from low-emission sectors. Second, by the underlying structure of the bond market, as this tends to be skewed towards carbon-intensive sectors. Third, among the eligible bonds, the ECB tends to select those from relatively emission-intensive sectors. To decarbonize the CSPP, the ECB can theoretically act along these three lines: (i) adjust the CSPP-eligibility criteria to expand the range of eligible low-carbon assets, (ii), revise the principle of market neutrality to tilt the CSPP portfolio towards low-carbon companies, or, (iii), purchase so far neglected low-carbon bonds within the current eligibility and market neutrality framework. As all approaches have either very limited effects or are associated with significant theoretical and practical concerns, we conclude that their contribution to the success of active green monetary policy is not guaranteed, while at the same time risks arise for a monetary policy that targets price stability.

Carbon pricing and enterprise productivity-The role of price stabilization mechanism

Total factor productivity (TFP) is widely used to evaluate the development quality of the economy, and carbon price stabilization mechanism (CPSM) has been introduced to reduce the climate policy uncertainty. Whether and how the CPSM can affect TFP is an issue of great interest. Using a unique panel dataset of China's 494 listed firms in 8 carbon intensive sectors from 2006 to 2019, we examine the effectiveness of the CPSM in China's carbon emission trading scheme (ETS). The results show that the carbon ETS with CPSM which has clear price corridors can improve the TFP by 0.381, the ETS with CPSM which has no explicit price ceiling or floor could improve TFP by 0.198, while the ETS without CPSM has decreased TFP by 0.352. The heterogeneity analysis indicates that the CPSM is effective to improve the TFP in power generation, building materials, nonferrous metals, and chemical sectors. Moreover, in terms of mechanisms, the CPSM can improve the TFP through promoting technological innovation and easing financing constraint. Our findings confirm the effectiveness of CPSM on the improvement of firm-level TFP and provide some key implications on how to design an effective CPSM.

The political economy of carbon border adjustment in the EU

Abstract The European Commission has proposed a Carbon Border Adjustment Mechanism (CBAM) to enable ambitious climate policies in EU member states and to incentivize emission reductions in other countries. This paper adopts a dynamic, multilevel, polycentric perspective to discuss how domestic as well as foreign interest groups would be affected by the policy. Our analysis yields three central insights. First, diplomatic efforts should be focused on a small number of countries that would be most severely affected by the CBAM. Second, the CBAM should be implemented as an enabler of domestic mitigation efforts in an open climate alliance instead of an attempt to extend EU climate policy to other countries. Third, gradually phasing in the CBAM while phasing out free emission permits for EU producers and supporting the transformation of carbon-intensive sectors in third countries can ease political opposition from domestic as well as foreign industries.

Carbon Management System Quality and Corporate Financial Performance

Synopsis The research problem This study examines the relationship between carbon management system quality and firm performance and investigates the mechanisms through which a carbon management system relates to firm performance. Motivation or theoretical reasoning Despite growing attention from academia and practice on carbon accounting in recent years, little is known about firms’ strategic implementation of carbon management systems and their impact on firms’ financial outcomes. Drawing on the resource-based view and institutional theory, this study argues that carbon management system implementation can create competitive advantages for firms through product differentiation and cost leadership. However, adopting quality management systems for carbon mitigation can be costly for firms. Additionally, not all firms would achieve such a differentiation advantage through a carbon management system. The test hypotheses H1: There is no relationship between the quality of a carbon management system and firm financial performance. H2: Carbon-intensive sectors have no moderating effect on the relationship between the quality of a carbon management system and firm financial performance. Target population Corporate managers and stakeholders including investors, international regulators, and standard settees. Adopted methodology Ordinary least square regressions. Analyses Corporate financial performance is measured by return on assets, calculated as earnings before extraordinary items divided by total assets at fiscal year-end. Our independent variable of interest is the quality measure of a carbon management system (QCMS). Following Tang and Luo ( 2014 ) and Luo and Tang ( 2016 ), QCMS is calculated as the average equal weighted sum of the standardized values from the 10 elements of a carbon management system. For additional tests, alternative performance measures (e.g., Tobin’s Q, return on equity, operating return on assets [ROA], and cash flow from operating activities to total assets) and disaggregated ROA components are employed as dependent variables. Findings We find that a firm’s carbon management system quality is positively associated with its financial performance. A better-quality carbon management system is especially associated with higher revenues, margins, and R&D expenditures. In addition, individual carbon management system components exhibit heterogeneous influences on financial performance. Specifically, the areas related to carbon disclosure and external carbon assurance have an incremental impact on financial performance. The positive association between a carbon management system and financial performance is stronger for firms operating in carbon-intensive sectors and firms with a higher level of carbon emissions. The carbon regulation affects the sensitivity of financial performance differently in intensive and non-intensive sectors in response to carbon management system quality.

Driving Factors and Spatiotemporal Characteristics of CO2 Emissions from Marine Fisheries in China: A Commonly Neglected Carbon-Intensive Sector.

The CO2 emissions from marine fisheries have a significant impact on marine ecology, despite generally being overlooked in studies on global climate change. Few studies have estimated the carbon emissions from marine fisheries while taking into account all pertinent sectors. This study evaluated marine fisheries' CO2 emissions based on three sectors: marine fishing, mariculture, and the marine aquatic product processing industry. Kernel density estimation and the spatial Durbin model were used to investigate the spatial and temporal characteristics and the key socioeconomic drivers of the CO2 emissions from marine fisheries in 11 coastal provinces of China from 2005 to 2020. The results are as follows: (1) marine fishing is the sector that produces the most CO2 emissions; trawling operations generate more CO2 than all other modes of operation combined; (2) China's marine fisheries' CO2 emissions show a rising, then declining, trend, with significant differences in coastal provinces; (3) the development of the marine fishery economy and trade have a positive driving effect on CO2 emissions, the expansion of the tertiary industry does not decrease CO2, the technical advancement and income growth of fishermen are negatively related to carbon emissions, and the effect of environmental regulation has failed to pass the significance test; (4) the carbon emissions of marine fisheries have significant spatial spillover effects.

Evaluating the green development level of global paper industry from 2000-2030 based on a market-extended LCA model

As a traditional energy and carbon intensive sector, it becomes imperative for the global paper industry to realize green development. This paper aims to provide guidance for the green transformation of global paper industry by evaluating the global paper industry green development level in a systematic and dynamic way. This paper employs text-mining method to develop paper industry green development evaluation indicator system and adopts market-extended LCA model and entropy-TOPSIS method to calculate the paper industry green development level of 48 countries/regions. The results show that during 2000–2030 the paper industry green development level of developing countries improves faster than developed countries, where those of developing and developed countries increase from 0.3369 to 0.3938 and from 0.5120 to 0.5517 respectively and the gap between them narrows from 0.1751 to 0.1579. The comparative analysis reveals that the paper industries of developed and developing countries are in different green development stages. Developing countries, represented by China, improve greatly in economic and social dimensions, but decline seriously in ecological dimension due to enlarging resource consumption and environmental damages. On the contrary, developed countries tend to saturate in economic and social dimensions and have been improving fast in ecological dimension, gradually realizing the decoupling of industrial economic development and environmental damages. To further promote the global paper industry green development, developing countries should focus on promoting the coordinated development between economic growth and environment protection and developed countries should play a leading role in the global green transformation by promoting optimal allocation of resources and cross-regional communications of green technologies.

Finance and Green Growth

Abstract We study how countries’ financial structure affects their transition to low-carbon growth. Using global industry-level data, we document that carbon-intensive industries reduce emissions faster in economies with deeper stock markets. The main channel underpinning this stylised fact is that stock markets facilitate green innovation in carbon-intensive sectors, resulting in lower carbon emissions per unit of output. More tentative evidence indicates that stock markets also help to reallocate investment towards more energy-efficient sectors. Cross-border spillovers are limited: less than 5% of these industry-level reductions in domestic emissions are offset by carbon embedded in imports. A firm-level analysis of an exogenous shock to the cost of equity in Belgium confirms our findings.

Firm-Level Attributes, Industry-Specific Factors, Stakeholder Pressure, and Country-Level Attributes: Global Evidence of What Inspires Corporate Sustainability Practices and Performance

This study examined differing attributes that motivate corporate sustainability practices and performance (CSP&P) in the global economy. Utilizing publicly disclosed information from the Carbon Disclosure Project (CDP), data were gathered for publicly listed companies operating in high carbon-intensive and less carbon-intensive sectors on a global scale, and a panel ordered probit regression model analysis was conducted to arrive at the findings. The rigorous reliability and validity of the scales were ensured. Firm-level attributes, industry-specific factors, stakeholder pressure, and country-level attributes were the variables examined for each context. The findings reveal that the firm-level attributes showed that board size, board independence, sustainability committee, and firm size were linked to positive motivation, while firm age was found to negatively influence the response level. The study discovered that the industry-specific factors variable has a negative significant influence because industry leaders (firms in high carbon-intensive sectors) exhibit poor sustainability performance, suggesting a negative attitude towards environmental issues. The study discovered a positive and highly significant influence of stakeholder pressure, while country-level attributes partially played a significant role. Overall, the findings show that a disparity exists in the level of response between the different global economies. The justification for the findings is based on the theory of interested parties, political theory, and legitimacy concerns that shape the strategic choices made by companies.

Limited impact of COVID-19 recovery packages on near-term CO2 emissions pathways

Part of the economic recovery plans implemented by governments following COVID-19 is directed towards the energy transition. To understand the potential effects of these post-COVID green recovery packages on reductions of global greenhouse gas emissions until 2030, we investigated three different approaches. First, we analyzed simulation results of Integrated Assessment Models (IAMs) to infer the change in CO2 intensity of GDP that could result from post-COVID low-carbon investment plans. Second, we investigated the scenarios the International Energy Agency (IEA) provided based on a bottom-up energy system model. Combining the two approaches, we found that green recovery packages implemented and planned globally can lead to an emissions reduction of merely 1%–6% from the 2030 baseline levels at most. Third, we looked into the results of the Adaptative Regional Input-Output model, which simulates the dynamic effects of economic crisis and fiscal stimuli through supply chains following labor shortage. The third approach shows that the increase of activity driven by fiscal stimuli leads to a rebound of CO2 emissions even if they do not target carbon-intensive sectors. We conclude that green recovery packages targeting low-carbon technologies have a limited impact on near-term CO2 emissions and that demand-side incentives, as well as other policy efforts to disincentivize the use of fossil fuels, are also crucial for scaling up climate mitigation.

A just transition: Insights from the labour unions of a steel locality (Taranto, Italy)

The just transition (JT) perspective has gained a generalized attention in recent years in conjunction with the increasing pressures that Western societies are under to green their economies as a way to address climate change. In this perspective the role of trade unions (TUs) is central as they are encouraged to drive the socio-technical transformation to avoid the intensification of the dilemma between the protection of jobs and the protection of the environment. The article explores the way in which TUs thematize the challenge of the JT in a specific locality – Taranto, Southern Italy – and in one of the most carbon-intensive sectors – the steel industry. Although they share common concerns, different positions emerge in relation to the nature of the challenge and the possible pathways to greening steel production in the area. Yet, trade unions are still elaborating the question of the role that they are called to play in it.

Repair and care: Locating the work of climate crisis

Climate crisis has arrived, and as predicted it has brought with it high levels of uncertainty. More frequent and extreme weather events expose infrastructural shortcomings, signalling a future characterised by profound disruption. It is time to turn our attention to the tangible work of climate crisis. Work is fundamental to embodied, material and spatial understandings of the world, yet it remains largely overlooked in social and cultural geography. What does the work of climate crisis look like, and who will do it? In this paper I argue that climate crisis demands more attention be paid to the deeply interwoven labours of repair and care. Reflecting on fieldwork across a range of carbon-intensive sectors and places, I locate the work of repair and care within the context of adaptation and mitigation action. Capacities to repair and care for our world and each other are profoundly important for adapting to the conditions of planetary breakdown. But the work of repair and care is also crucial for transitioning to low-carbon futures. A focus on this vital work suggests a deeply pragmatic and inclusive environmental politics and scholarship, bringing into dialogue rich veins of work within and beyond geography, on labour and everyday life.

Factor decomposition for global and national aggregate energy intensity change during 2000–2014

Intensity indicators are indispensable for monitoring global sustainability. Here aggregate energy intensity (AEI) was established to measure global sustainable energy resources utilization. Compared to traditional energy intensity, AEI integrates energy consumption and its concomitant economic gains. On this basis, temporal variation of global and regional AEI and its sectoral driving factors were examined. Results show that global AEI has declined by about 9% during 2000–2014. Electricity dominated (46%) global AEI composition and it pulled down global AEI with merely 1%, which was primarily brought by the falling share of electricity in global economy rather than electricity AEI decline. Regionally, AEI in most world areas (39/44) has declined, only five economies (Turkey, Brazil, Mexico, Indonesia, and India) held a rising AEI, which was motivated by their increased AEI and consumption proportion for carbon-intensive sectors. The marked rise in domestic energy intensity and import share were critical factors for the increased AEI of electricity, metal, and non-metal sectors in these regions. Policymaking targeted at adopting measures that reduce domestic energy intensity and consumption share for carbon-intensive sectors in economically backward regions was recommended for the purpose of mitigating global AEI.

How do China’s lockdown and post-COVID-19 stimuli impact carbon emissions and economic output? Retrospective estimates and prospective trajectories

SummaryThis paper develops a multi-sector and multi-factor structural gravity model that allows an analytical and quantitative decomposition of the emission and output changes into composition and technique effects. We find that the negative production shock of China’s containment policy propagates globally via supply chains, with the carbon-intensive sectors experiencing the greatest carbon emission shocks. We further reveal that China’s current stimulus package in 2021–2025 is consistent with China’s emission intensity-reduction goals for 2025, but further efforts are required to meet China’s carbon emissions-peaking target in 2030 and Cancun 2°C goal. Short-term changes in carbon emissions resulting from lockdowns and initial fiscal stimuli in “economic rescue” period have minor long-term effects, whereas the transitional direction of future fiscal stimulus exerts more predominant impact on long-term carbon emissions. The efficiency improvement effects are more important than the sectoral structure effects of the fiscal stimulus in achieving greener economic growth.

A Framework for CO2 Emission Reduction in Manufacturing Industries: A Steel Industry Case

Rising carbon emissions are linked to the increase in global temperature, because of increasing human activities and increasing greenhouse gas emissions. Since manufacturing is one of the most carbon intensive sectors, it is vital to suggest solutions that lead to carbon emission reduction in all sectors, among which is the steelmaking manufacturing sector. The present study focuses on presenting a framework for energy intensive industries introducing digitalization and energy efficient equipment in the production line. The current framework proposes different metrics, both from carbon emissions and cost viewpoints. A secondary steelmaking industry was used as a case study, showcasing the impact of digitalization and energy efficient equipment towards the reduction of carbon emissions. In addition, different metrics were calculated with energy efficient scenarios providing the lowest energy consumption metric, but their high purchasing costs make these scenarios less attractive. However, if carbon emission reduction per cost is the metric, a combination of digital tools and energy efficient equipment is the answer to the company’s needs. Applying the concepts of innovation absorption and digitalization, the number of alternatives is kept low, however, the impact on the line is quite large. The introduction of new technologies is also supported by training of the workforce, aligning the framework with current industrial trends.

Quantified impacts of international trade on the United States' carbon intensity.

After the USA reached its carbon emission peak in 2007, the share of carbon emissions from its energy activities showed a downward trend. As a country that accounts for even close to 80% of the tertiary industry, the final demands from other industries are usually met by other countries in the form of international trade. While trade is realizing economic transfer, it also realizes the transfer of carbon emissions to a certain extent, helping the country achieve the peaks. From the perspective of combining carbon emission transfer and economic transfer, are there transfers and impacts? In this study, the quantified impact of international trade on the USA's carbon intensity has been investigated by a novel framework, based on a porposed scenario analysis using MRIO. As it gets lower aggregate carbon intensity value under trade scenario, it concludes that international trade is more conducive to the needs of this country for carbon emission reduction and economic development in general. From the different trade patterns, all of them get lower carbon intensity values under trade than no-trade scenario. From trade partners' perspectives, the positive and negative of the intensity gap cannot be kept uniform for all traders. Sectoral driving factors are decomposed by LMDI method, with the sectoral effect of aggrerate value-added structure and sectoral aggregate embodied carbon intensity. Among obvious carbon-intensive sectors, transport sectors always show a negative effect for the gap, and heavy manufacturing and electricity sectors usually give positive effects. As a major trading country in the world, trade and exchanges with other countries are more conducive to this country with a lower carbon intensity, and it also requires the country to shoulder coresponding responsiblities as a great power while enjoying the benefies. It is conducive to the further strengthening of unity of the international community, to jointly address the challenges of climate change and achieve the subsequent carbon neutral targets.

Brace for turbulence: EU Member States’ climate strategies in the aviation sector

The European Green Deal (EGD) aims to transform the European Union (EU) into a climate neutral continent by 2050, requiring significant changes within carbon-intensive sectors. In this article, we examine EU Member States’ climate strategies in the aviation sector, where greenhouse gas emissions have doubled since 1990. We analyse EU National Energy and Climate Plans (NECPs) in order to examine national commitments on aviation. How frequently do EU Member States refer to aviation in their NECPs, and how can these references be understood thematically? First, by conducting a content analysis on all 54 draft and final NECPs, we identify how frequently 11 aviation-related terms were used. While all states increased the number of aviation references between their draft and final NECPs, Central and Eastern states showed the smallest increase. We show that Southern and Western Member States reference aviation most frequently in their final NECPs. Second, in our thematic analysis, we identify three key themes—‘contextual information’, ‘public policy’, and ‘fuels and propulsion’—that we divide into 17 sub-themes. Approximately half of the themes focused on contextual information, such as current aviation emissions, with the other half focusing on carbon reduction strategies, especially the EU Emissions Trading System, biofuels, and taxation. Western EU states provided the largest number of concrete policy statements on reducing aviation emissions and the promotion of biofuels. There were only two references to reducing the number of flights, across almost 7500 pages of climate documents. We conclude that the NECPs represent a promising means of conducting cross-country climate policy analysis, in order to compare efforts across economic sectors within Europe. With our analysis, we create a pre-pandemic sectoral baseline for aviation which can be used for further study.