Consumption-based CO2 Emissions Research Articles

Production- and consumption-based emissions in carbon exporters and importers: A large panel data analysis for the EKC hypothesis

The Environmental Kuznets Curve (EKC) hypothesis has become a widely used framework for the investigation of the income-environment nexus. However, the literature in this field is biased toward the reliance on production-based carbon dioxide (CO2) emissions (PBE) as a proxy for environmental degradation. This production perspective ignores the carbon emissions embedded in trade, which are estimated to make up approximately a quarter of total global emissions. Therefore, the carbon leakage issue makes consumption-based CO2 emissions (CBE) accounting vital for better understanding the relationship between income and carbon emissions. In this study, we comparatively investigate the EKC pattern based on both PBE and CBE for a sample of 85 countries over the period between 1990 and 2020. In doing so, we investigate whether different emission accounting methods have an impact on the EKC pattern and examine how this impact differs depending on whether the countries are net importers or exporters of emissions embedded in trade. To this end, we first endogenously classify countries based on the club convergence approach proposed by Phillips & Sul [1] and obtain country groups such as those that are net exporters or importers of CO2 emissions. Using the system generalized method of moments (SGMM) estimator, we test the validity of the EKC hypothesis in the second step and identify the main driving forces behind the changes in PBE and CBE for each convergent club by controlling the effect of trade and urbanization. Therefore, for the first time, we compare the EKC hypothesis based on both PBE and CBE for a large sample of countries that are endogenously divided into different groups, and investigate the potential impact of alternative emission accounting approaches and the status of being net exporters or importers of CO2 emissions on the EKC pattern. The findings support the different patterns for PBE and CBE: while the EKC hypothesis is supported for both PBE and CBE for countries that are net importers of emissions, neither PBE nor CBE show an inverted U-shaped relationship with income for countries that are net exporters of emissions. These results strongly support the need for coordination in policies to reduce CO2 emissions between importers and exporters of hydrocarbons and energy-intensive goods.

Tracking the consumption-based CO2 emissions of typical Chinese megacities in multiscale economies

Accurately tracking consumption-based CO2 emissions of megacities is crucial for clarifying regional mitigation responsibility. However, without a general emission framework, it's challenging to accomplish comparative studies of multi-megacities by quantitative carbon flow analyses. Here, we constructed a megacity-centred multilevel emission accounting framework and developed a methodology based on the revised multiscale multi-regional input-output model. Our approach integrates in-boundary and trans-boundary carbon flow driven by final demand and thus constructs urban classifications based on self-constructed consumption degree. The results indicate heterogeneity and commonality of megacities' consumption-based emissions in spatial and industrial distribution. Trans-boundary consumption-based emissions account for 81%–93% of the total in megacities, mainly from mainland China. While the majority of megacities are net importers overall, for relatively developed regions, megacities with low consumption degrees remain net exporters. At sector-level, 3 key sectors of other manufacturing, construction and services drive more than 75% of emissions. Inspired by the results, we propose differentiated carbon governance implications based on urban emission pattern classification, exploring priorities for emission reduction. Our research indicated the need for megacities as pioneers to consider consumption-side emission reductions.

The role of institutional quality in reducing environmental degradation in Canada

This paper uses the Fully Modified Ordinary Least Squares (FMOLS) technique to explore the influence of institutional quality, income, consumption of renewable energy, trade openness, and total factor productivity on consumption-based CO2 emissions in Canada from 1996 to 2021. Estimation findings showed that institutional quality, renewable energy use, and total factor productivity exert a statistically significant and negative influence on CO2 emissions. Moreover, our findings indicated that there is a statistically significant and positive impact of income on CO2 emissions, while trade openness exhibits an insignificant impact on CO2 emissions. The study discusses alternative policies, emphasizing the role of institutional quality in reducing CO2 emissions.

Identification on the common supply chain paths of CO2 and NOx emissions from the manufacturing industry in China

ABSTRACT Since the ‘Made in China 2025’ initiative was proposed, the transformation and upgrading of China’s manufacturing industry towards a high-end, intelligent, and green status has been accelerated, and the climate change and air pollution issues draw immediate attention. This paper investigated the simultaneous control paths of CO2 and NOx emissions throughout the manufacturing transition in China. Based on environmental input-output analysis, the production- and consumption-based CO2 and NOx emissions in 2015 and 2020 were evaluated, indicating that over 70% of production-side emissions were caused by medium-technology manufacturing, and over 50% of consumption-side emissions came from high-technology manufacturing. Then, the structural path analysis was introduced to extract the synergistic emission pathways of CO2 and NOx. The ‘smelting and pressing of metal sector → construction → investment’ pathway, which produced emissions of 347.71 Mt CO2 and 639.9 Kt NOx in 2015, was identified as the most critical path to achieve manufacturing synergistic reduction. Additionally, investment demand in the construction sector seriously affected the collaborative reduction of CO2 and NOx emissions in supply chains of medium-technology manufacturing. The critical supply chain of high-technology manufacturing for achieving coordinated emission reduction was mainly driven by export demand for chemical products.

Have consumption-based CO2 emissions in developed countries peaked?

This study innovatively divided consumption-based CO2 emissions of developed countries into domestic and foreign components using an environmentally extended multi-regional input–output model, and revealed their different driving factors using the structural decomposition analysis method. The results showed that the consumption-based emission peaked in 16 developed countries, with 14 countries peaking around 2008. Domestic emissions in all 16 developed countries had peaked, most of which accounted for 40–70% of the total consumption-based emissions. However, the foreign emissions driven by 9 peaking countries still kept increasing. Regarding domestic emissions, the decline of domestic carbon intensity was the main driving factor across 16 peaking countries. In terms of foreign emissions, carbon intensity decline, especially in main medium- and low-income countries, was the dominant factor in the CO2 emissions decrease. Significant improvements in production technology levels of medium-income countries played a key role in weakening the carbon-increasing effects of foreign emissions during the post-peak period. Thus, to further promote global carbon emissions to peak as soon as possible, peaking developed countries should provide more emission reduction funds and technologies to support the decline in carbon intensity and the improvement of production technology in medium- and low-income countries.

Do renewable energy and total factor productivity eliminate CO2 emissions in Turkey?

This paper analyzes the impact of renewable energy consumption, total factor productivity (TFP), income, imports, and exports on consumption-based CO2 emissions in Turkey from 1990 to 2019, utilizing the Autoregressive Distributed Lagged (ARDL) method. The findings indicated that the use of renewable energy, total factor productivity and exports negatively influence CO2 emissions. On the other hand, the positive impact of income and imports on CO2 emissions was found. The negative impact of renewable energy consumption and total factor productivity highlights the importance of implementing environmentally friendly measures in the energy sector (particularly raising the proportion of renewable energy in overall energy consumption) and technological innovation.

Does resource efficiency matter for environmental quality in Canada?

In order to combat climate change, the OECD emphasized the need to minimize the environmental impact of material use, as well as promote resource efficiency and accelerate the creation of a circular economy. The present study objects to promote a new debate about Canadian environmental quality and resource efficiency. In other words, this paper aims to capture the effect of resource efficiency on environmental quality in Canada while controlling financial development, economic growth, and energy. Nonlinear ARDL bounds test results indicate the significant long-run linkage between environmental quality, resource efficiency, financial development, economic growth, and energy in Canada. Moreover, the asymmetric results underline that 1) resource efficiency mitigates environmental degradation; 2) economic growth and energy uses in Canada significantly increase consumption-based CO2 emissions; 3) financial development positively contributes to environmental stability. Therefore, policymakers in Canada make sure that circular economies and resource efficiency can help reach net zero and combat climate change.

Navigating carbon emissions in G-7 economies: a quantile regression analysis of environmental-economic interplay.

This study employs panel data from 1990 to 2020 for the G-7 countries (Canada, France, Germany, Italy, Japan, the UK, and the USA) and employs the examination of heterogeneous slope coefficients and cross-sectional dependence tests as preliminary steps before conducting cointegration analysis and second-generation unit-root tests. This study employs the method of movement quantile regression (MMQR) to analyze long-run and short-run relationships. The findings from the MMQR model indicate that economic growth and imports have a negative impact on consumption-based CO2 (CCO2) emissions, which worsens at higher quantiles. On the other hand, exports, energy efficiency, and renewable energy output (REO) have a positive effect on mitigating CCO2 emissions, with this effect becoming more pronounced at higher quantiles. Furthermore, the robustness of the results was confirmed through rigorous checks using quantile regression with optimized Markov Chain Monte Carlo techniques, which is a reliable non-parametric approach. These checks consistently demonstrated a significant impact on CCO2 emissions, thus validating the findings obtained from MMQR. Based on the outcomes, this study recommends that each G-7 nations should make efforts to regulate their CCO2 emissions by adopting measures that foster ecological equilibrium. Moreover, fostering export-driven sectors, exploring innovative strategies for REO, and improving energy efficiency are crucial measures for effectively tackling CCO2 emissions within the G-7 countries. The study highlights that renewable energy output (REO) and energy efficiency effectively mitigate CCO2 emissions at higher quantiles, suggesting the importance of policy measures supporting their development. Additionally, policies targeting import reduction, export promotion, and carbon pricing mechanisms emerge as strategies to curb emissions and foster sustainable development.

Resource efficiency, energy productivity, and environmental quality in Japan

This paper proposes to identify the effect of resource efficiency and energy productivity on environmental quality in Japan over the period of 1990Q1-2020Q4 while controlling economic growth and globalization. The focus of this research is to provide some insightful findings by undertaking robust empirical research to support Sustainable Development Goals. The present study employs novel estimators, namely nonlinear autoregressive distributed lag (N-ARDL), Fourier autoregressive distributive lag cointegration (F-ADL-C), Diks and Panchenko asymmetric causality (DPA-C), and gradual shift causality (GS-C) tests. Both nonlinear bounds and F-ADL-C tests confirm the long-run association among the time series variables. Moreover, positive stock to resource efficiency has a negative impact on environmental degradation, while negative stock to resource efficiency raises consumption-based CO2 emissions. In addition, rising energy productivity causes to decrease in consumption-based CO2 emissions. Finally, the GS-C and DPA-C tests also reveal that resource efficiency and energy productivity are important predictors of consumption-based CO2 emissions in Japan.

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.

Consumption-based CO2 emissions in Denmark: The role of financial stability and energy productivity.

Climate change can be mitigated and policies can be catalyzed with the aid of financial institutions. By maintaining and strengthening financial stability, the financial sector's resilience could help mitigate climate-related risks and uncertainties. Hence, an empirical investigation on the effect of financial stability on consumption-based CO2 emissions (CCO2 E) in Denmark is long overdue. This study investigates the financial risk-emissions relationship in the presence of energy productivity, energy consumption, and economic growth in Denmark. Furthermore, by adopting an asymmetric approach to analyze the time series data for the period between 1995 and 2018, this study helps bridge this major gap in the literature. By adopting the nonlinear autoregressive distributed lag approach (NARDL), we discovered that the positive variation in financial stability causes a reduction in CCO2 E, but the neutral connection was reported between the negative shock in financial stability and CCO2 E. The positive shock in economic growth and energy consumption intensifies CCO2 E; however, a neutral interaction exists between the negative shock in economic growth and CCO2 E. The negative shock in energy consumption has a positive effect on CCO2 E, indicating a mitigating implication on environmental degradation. In addition, a positive shock in energy productivity enhances environmental quality, while a negative shock in energy productivity increases environmental degradation. In light of the results, we suggest some robust policies for Denmark and other smaller but wealthy nations. Moreover, in order to developsustainable finance markets, policymakers in Denmark need to mobilize both public and private finance while maintaining a balance with other economic needs of the nation. The country must also identify and understand potential avenues for scaling up private financing for mitigating climate risk. Integr Environ Assess Manag 2023;00:1-10. © 2023 SETAC.

FDI, exports, imports, and consumption-based CO2 emissions in the MENA region: spatial analysis

MENA region is full of natural resources and has a huge mineral sector in their economies. CO2 emissions are increasing global warming and foreign trade and investments can play their roles in determining CO2 emissions in the resource-rich MENA countries. Moreover, spatial linkages are expected in the emissions and trade relationship, which could catch less attention in the environmental literature of the MENA region. Thus, the present research is motivated to capture the contributions of exports, imports, and Foreign Direct Investments (FDI) in consumption-based CO2 (CBC) emissions in twelve MENA economies from 1995 to 2020 by applying Spatial Autoregressive (SAR) Model. Our results exhibit the existence of the Environmental Kuznets Curve (EKC). Moreover, the impact of exports is found negative in direct and total estimates. Thus, exports of the MENA region are reducing CBC emissions in the MENA region and transferring emissions to their importing partners. Moreover, the spillovers of exports are found positive and exports of one MENA country are also responsible for the transfer of CBC emissions to other MENA neighboring countries, which corroborates the trade linkages of the MENA region. Imports have a positive effect on CBC emissions in direct and total effects. This result confirms the fact of energy-intensive imports of the MENA region, which have environmental consequences in the domestic economies and the whole MENA region. FDI increases CBC emissions in direct and total estimates. This result substantiates the pollution Haven hypothesis in the MENA region and is in line with the fact that FDI is mostly coming in the mineral, construction, and chemical sectors. The study suggests that MENA countries should promote exports to reduce CBC emissions and to reduce energy-intensive imports in the region to save the environment from CBC emissions. Moreover, FDI should be attracted to the clean production process and environmental standards should be raised to avoid the environmental problems of FDI in the MENA region.

Economic complexity and environmental pollution: evidence from the former socialist transition countries

This study examines the link between economic complexity and environmental pollution by exploiting a massive and unprecedented decline of CO2 emissions and complexity in the former socialist transition countries after the fall of the iron curtain. We refer to the extended theories of the Environmental Kuznets Curve (EKC), stating that environmental pollution follows an inverted u-shaped course with respect to economic complexity. Using comprehensive data of 27 countries for the period 1995–2017, our results show that the EKC can be found for countries whose complexity rose over time. Additionally, since the results for production-based and consumption-based CO2 emissions are similar, we can discard emissions offshoring as a major explaining factor. Consequently, our findings suggest that more complex products have influenced the u-shaped course of the EKC. However, as the turning point is associated with high levels of pollution, our estimates imply that complexity may even exacerbate environmental issues in the short and middle run in less developed countries.

Renewable energy, foreign direct investment and carbon dioxide emissions: Do sectoral value additions and policy uncertainty matter?

The effects of foreign direct investment (FDI) and renewable energy on disaggregated carbon emissions are examined, while accounting for sectoral value additions and policy uncertainty for 29 sub-Saharan Africa countries. The findings that emanate from the study based on the General Method of Moments technique indicate that renewable energy has adverse effect on both territorial-based and consumption-based CO2 emissions while FDI has a significant positive effect only on territorial emission. Furthermore, the agricultural and industrial sectors in particular were found to have significant effects on CO2 emissions. Finally, policy uncertainty contributes to territorial based emissions but not consumption-based emissions. Thus, reducing policy uncertainties in the economies of SSA has the potential to reduce CO2 emissions.

Unstable decoupling of CO2 emissions from sectoral economic growth calls for decarbonization policies based on multi-perspective accounting: a case study of Zhejiang, China.

Decoupling CO2 emissions from economic growth is an important cornerstone of a country's decarbonization policy. Existing research in this avenue has mainly focused on decoupling the production-based (PB) CO2 emissions from economic growth at the national level, while decoupling the consumption-based (CB) and income-based (IB) CO2 emissions from economic growth, especially at the sectoral level, has received less attention. Using China's Zhejiang province as a case study, we conduct one of the first studies focused on decoupling the PB, CB, and IB CO2 emissions from economic growth at the sectoral level. Our results reveal that (1) during 2002-2017, the sectoral decoupling level varies greatly among the three different perspectives; (2) most of the examined sectors were in unstable decoupling states while some sectors even reverted to coupling states; and (3) the drivers of CO2 emissions at the sectoral level reveal important factors, such as emissions intensity, production structure, and final demand structure, that contribute toward decarbonization. Our study demonstrates to policymakers how utilizing a multi-perspective evaluation of the decoupling of emissions from sectoral economic growth can improve the accuracy of decarbonization policies and identify critical sectors toward CO2 reduction objectives.

The role of renewable energy and total factor productivity in reducing CO2 emissions in Azerbaijan. Fresh insights from a new theoretical framework coupled with Autometrics

Environmental issues, such as carbon dioxide (CO2) emissions, are humanity's most critical issues. Emissions released by oil-producing countries is not small. This is because these countries have an abundance of fossil fuels with considerably low prices, and the cost of using these natural sources to obtain energy is significantly cheaper than using alternative energy sources. This study examined pollution in Azerbaijan, an oil-producing country. It uses a new theoretically grounded framework in which consumption-based CO2 emissions are a function of renewable energy consumption (REC) and total factor productivity (TFP), as well as income, exports, and imports. REC and TFP have not only emission-reducing properties but also growth-enhancing benefits and are, therefore, very useful to be considered in environmental policies. Econometric analysis was conducted with robustness checks and the state-of-the-art econometric methodology called Autometrics – a machine learning algorithm for model discovery – was employed. CO2 was found to be negatively affected by TFP and REC. Exports also exert a negative impact on CO2, while the effects of income and imports are positive. Our key policy insights are that Azerbaijani policymakers may wish to implement policies that further promote technological improvements, efficiency gains, and transitions to renewable energy.

The asymmetric and long-run effect of environmental innovation and CO2 intensity of GDP on consumption-based CO2 emissions in Denmark.

The study explores the relationship between globalization, GDP, the carbon intensity of GDP, patents, and its effect on consumption-based carbon emissions (CCO2E). For analysis, novel econometric approaches include nonlinear ARDL and Fourier ARDL, and for robustness, dynamic OLS applied. The results from cointegration tests reveal that there exists a significant long-run relationship between CCO2E, globalization, economic growth, patents, and the carbon intensity of GDP. Additionally, the empirical results indicate that only positive shock in patents on environmental innovations have a negative and significant impact on CCO2E, while positive and negative shocks in GDP and carbon intensity of GDP significantly increase CCO2E. However, only a negative shock in globalization demonstrates the increase in CCO2E. Also, dynamic OLS findings confirmed the robustness. Given the outcome, it is recommended that the Danish government be cautious when approving policies intended to increase economic growth, as this could negatively affect environmental sustainability. More so, research and development must contribute to technological advancement in the Danish manufacturing sector. Despite this, it is important to prioritize patent promotion. Patent protection can enable Denmark to develop eco-friendly technologies that can reduce carbon emissions, thus enabling life to be more sustainable by utilizing fewer resources and energy. Denmark can reduce CO2E and foster economic development through a strong patent system on environmental technologies.

The Impacts of Economic Growth on Per Capita Consumption-Based Co2 Emission Between China and United States

This paper attempts to investigate the impact of economic growth, population, and energy consumption on consumption-based CO2 emissions for a global panel of China and U.S. with the comparison of two dynamic models, pooled OLS and LSDV, for the period 1990–2016. The empirical evidence indicates significant positive impacts of economic growth and energy consumption and negative effect of population on CO2 emissions for global panels. Besides, it shows the different responsibilities on reducing energy consumption and CO2 emissions between developing and developed countries.

Comparing Production- and Consumptionbased CO₂ Emissions by Economic Growth

Comparing Production- and Consumptionbased CO₂ Emissions by Economic Growth

Carbon-dioxide emissions management in Sub-Saharan Africa – the irrelevance of natural resource rent as a corrective policy tool

ABSTRACT This paper revisits the role of natural resource rent in explaining and regulating CO2 emissions in Sub-Saharan Africa (SSA). Three variants of CO2 emissions are considered: territorial CO2 emissions, consumption-based CO2 emissions, and CO2 emission intensity. Panel-corrected standard error and panel autoregressive distributed lag estimation methods were applied. Results show that natural resource rent has a positive effect on consumption-based CO2 emissions, and a negative effect on CO2 emission intensity, but has no effect on territorial CO2 emissions. The results show that while high resource rent in SSA appears to finance consumption of pollution-laden imported goods, it worsens neither territorial CO2 emissions nor CO2 emission intensity. Given that importation of dirty goods is an economic system failure which is not imputable to resource rent, it is safe to conclude that, resource rent does not contribute to rising CO2 emissions in SSA.