Consumption-based Emissions Research Articles

Do methane emissions converge? Evidence from global panel data on production- and consumption-based emissions

Methane emissions are the second most important contributor to global warming. Knowledge about the dynamics of methane emissions facilitates the formulation of climate policies and the understanding of their consequences. We investigate whether methane emissions released from production and embodied in consumption converge within and across regions. Our estimates rely on global panel data on methane per capita and methane intensities over 1997–2014. We find that emissions converge within countries. The short half-lives show that the emissions of countries are close to their steady states. There is no evidence for international convergence of aggregate emissions. Yet, convergence of emissions across regions occurs in a number of economic sectors. Our results highlight the difficulties to achieve methane abatement in the medium run. The formulation of climate policies should take into account the sectoral specificity of the dynamics of methane emissions.

Carbon decoupling and economic growth in Africa: Evidence from production and consumption-based carbon emissions

This study examines the issue of decoupling between economic growth and carbon emissions in 25 African countries over 1990–2017. The study also assesses the role of international trade on carbon emissions The novelty of this study is that it jointly considers both production-based and consumption-based carbon emissions approaches in the regional decoupling analysis and the corresponding separate effects of exports and imports on the decoupling process. The Common Correlated Effects Mean Group (CCE-MG) and Augmented Mean Group (AMG) estimation techniques which allow for cross-sectional dependence, heterogeneity, endogeneity, and serial-correlation issues are mainly applied for empirical analysis. The findings invariably indicate some evidence of relative decoupling for production-based emissions, as the threshold levels of GDP per capita are located well within the range of data in all estimations, but above the sample average of $3770. In contrast, there is no robust evidence of decoupling for consumption-related emissions. Primary energy intensity and population are found as the main drivers of carbon emissions. Further, exports and imports have insignificant effects on production-based emissions, but significant and offsetting effects on consumption-based emissions. The policy implication of the study, thus, is that the global community and policymakers need to pay close attention to consumption-based carbon emissions in international climate negotiations and target-setting discussions, as production-related emissions alone would be insufficient for decarbonizing economic growth.

Key drivers of consumption-based carbon emissions: empirical evidence from SAARC countries.

To devise an appropriate climate policy dealing with environmental degradation, reliable measurement of CO2 emissions is essential. In the recent past, most researchers have utilized production-based emissions in their studies, ignoring the important role of consumption-based emissions in environmental degradation. Therefore, the present research examines the drivers of consumption-based CO2 emissions in SAARC nations over the period 1990 to 2018. By employing traditional and second-generation panel cointegration methodologies, the study, more specifically, explores the link between consumption-based CO2 emissions and its five macroeconomic determinants, namely, GDP growth, energy consumption, FDI, trade openness (measured by composite trade share index), and urbanization. The study also applies the FMOLS and DOLS techniques for calculating the long-run elasticities of regressors with respect to the explained variable. The results establish a cointegration relationship between the variables and validate an "N-shaped EKC" for the SAARC region. It is also found that in the long run, energy consumption and urbanization amplify the consumption-based CO2 emissions while FDI and trade openness improve the environmental quality by plummeting emissions. Most importantly, the study rejects the "pollution-haven hypothesis" for the SAARC region based on the outcomes of FDI and trade openness. Lastly, based on the results, some policies are recommended for the abatement of environmental degradation in SAARC countries. As the SAARC nations rely heavily on fossil-based energy, it is suggestive for these economies to enhance the level of energy efficiency and augment the share of renewable energy sources in the energy mix. Furthermore, the policy designers in this region should encourage trade openness and liberalize inward FDI for containing consumption-based emissions.

Heterogeneity of consumption-based carbon emissions and driving forces in Indian states

As the second most populous country in the world, India is on the way to rapid industrialization and urbanization, possibly becoming the next carbon giant. With its vast territory and high regional heterogeneity in terms of development stages and population, state-level consumption-based emissions patterns and driving forces are critical but unfortunately, remain far from completed. In this paper, we first applied a multi-regional input-output model to ascertain heterogeneity in consumption-based emissions and track carbon flows in the inter-state supply chain, using our newly constructed Indian multi-state input-output table for 2015, based on Flegg location quotient method. We found that household consumption dominated consumption-based emissions at state levels, accounting for 60–78% of total consumption-based emissions, while investment-led emissions were relatively higher in developed regions the in developing regions. More than 30% of consumption-based emissions in developed states were imported from less developed states with higher carbon intensity, indicating a large spillover effect. In India's low carbon transition, policymakers should not only focus on a local mitigation policy in developed states, but on carbon leakage from the developing states, given the significant heterogeneity in industrial distribution and population. Inter-state cooperation is recommended, with developed states subsidizing the mitigation in the developing states, which also entails a lower marginal cost to low carbon transition.

Evidence of decoupling consumption-based CO2 emissions from economic growth

• 32 of 116 countries achieved absolute decoupling between GDP and PBE 2015–2018. • 23 countries achieved absolute decoupling between GDP and CBE 2015–2018. • Decoupling is temporary, decoupled countries may switch back to increasing emissions. • Decoupling depends on reducing emission intensity along domestic and import supply chains. Decoupling economic growth from resource use and emissions is a precondition to stay within planetary boundaries. A number of countries have achieved a reduction in their production-based emissions in the past decade. However, the decline in PBE has often been achieved via outsourcing of emissions to other countries, which may even lead to higher emissions globally. Therefore, a consumption-based perspective that accounts for a country's emissions along global supply chains should also be employed when investigating progress in decoupling. Here we investigate the progress countries made in reducing their production-based and consumption-based emissions despite growth in gross domestic product (GDP). We found that 32 out of 116 countries (mainly developed ones) achieved absolute decoupling between GDP and production-based emissions in recent years (2015–2018), and 23 countries achieved absolute decoupling between GDP and consumption-based emissions. 14 countries have decoupled GDP growth from both production- and consumption-based emissions. Even countries that have achieved absolute decoupling are still adding emissions to the atmosphere thus showing the limits of ‘green growth’ and the growth paradigm. We also observed that decoupling can be temporary, and decoupled countries may switch back to increasing emissions, which means that continuous efforts are needed to maintain decoupling. An analysis of driving factors shows that whether a country can achieve decoupling mainly depends on reducing emission intensity along domestic and import supply chains. This highlights the importance of decarbonizing supply chains and international collaboration in controlling emissions.

Empirical study on the impact of international trade and foreign direct investment on carbon emission for belt and road countries

The rapid development of trade along the Belt and Road Initiative (BRI) directly affect economic growth and influence carbon emission. This study used fifty-two BRI countries out of the sixty-five countries that signed onto the BRI in 2013 for the empirical study. The panel data extracted is from the period 1993 to 2018. The study utilized the Common Correlated Effects Mean Group (CCEMG) and the Augmented Mean Group (AMG) estimation techniques for the empirical analysis. The findings revealed a positive link between imports and carbon emissions. Contrarily, exports revealed an inverse relationship with carbon emission, while foreign direct investment inflow revealed a positive but insignificant relationship with consumption-based carbon emission. Therefore, it is recommended that to control the environment and maintain ecological balance, there is the need to establish environmental protection clauses in many international treaties and domestic legislation while promoting international trade.

The effect of nuclear energy on the environment in the context of globalization: Consumption vs production-based CO2 emissions

The earlier studies have analyzed theoretical links between nuclear energy and carbon dioxide (CO2) emissions concerning territorial (or production-based) emissions. Here using the latest available dataset, this study explores the impacts of nuclear energy on production-based and consumption-based CO2 emission in the era of globalization for the Organization for Economic Co-operation and Development (OECD) countries. The Driscoll-Kraay regression method reveals that nuclear energy is beneficial for the reduction of production-based CO2 emissions. However, it is revealed that nuclear energy does not reduce consumption-based CO2 emissions that are traded internationally and hence not comprised in conventional production-based emissions (territory) inventories. Globalization tends to reduce both production-based and demand-based carbon emissions. Finally, Environmental Kuznets Curve (EKC) is validated for both kinds of CO2 emissions. The findings may deliver practical policy implications related to nuclear energy and CO2 emissions for selected countries.

Asymmetric Impact of International Trade on Consumption-Based Carbon Emissions in MINT Nations

The association between carbon emissions and international trade has been examined thoroughly; however, consumption-based carbon emissions, which is adjusted for international trade, have not been studied extensively. Therefore, the present study assesses the asymmetric impact of trade (import and export) and economic growth in consumption-based carbon emissions (CCO2) using the MINT nations (Mexico, Indonesia, Nigeria and Turkey) as a case study. We applied the Nonlinear ARDL to assess this connection using dataset between 1990 and 2018. The outcomes from the BDS test affirmed the use of nonlinear techniques. Furthermore, the NARDL bounds test confirmed long-run association between CCO2 and exports, imports and economic growth. The outcomes from the NARDL long and short-run estimates disclosed that positive (negative) shocks in imports increase (decrease) CCO2 emissions in all the MINT nations. Moreover, positive (negative) shocks in exports decrease (increase) CCO2 emissions in all the MINT nations. As expected, a positive shock in economic growth triggers CCO2 emissions while a negative shift does not have significant impact on CCO2 emissions in the MINT nations. Furthermore, we applied the Gradual shift causality test and the outcomes disclose that imports and economic growth can predict CCO2 emissions in the MINT nations. The study outcomes have significant policy recommendations for policymakers in the MINT nations.

Greenhouse gas emissions in British Columbia: Production versus consumption accounting from 2010 to 2015

As a result of carbon-pricing policies, a number of jurisdictions across the world claim to be decoupling their greenhouse gas (GHG) emissions from their gross domestic product (GDP). In British Columbia (BC), Canada, in what appears to be decoupling from 2007 to 2018, GHGs with respect to GDP declined by 16% ( BC Government 2020 ). This finding, however, is the result of a production-based method of accounting—the predominant global approach for allocating emissions—and not a consumption-based method. In this study, we compare these two accounting methods with respect to British Columbian decoupling. We calculate consumption-based emissions through a multi-regional input-output analysis from 2010 to 2015. In our results for 2015, we find total consumption emissions of 82.5Mt of CO 2 e; when compared to the total production emissions of 73.7Mt of CO 2 e, we find BC to be a net consumer of emissions by 8.8Mt of CO 2 e for 2015. Although BC has had this net consumer status since at least 2004 ( Dobson and Fellows, 2017 ), this orientation is in decline primarily due to the decarbonizing trends of China and the USA. In short, for BC from 2010–2015, on a per capita basis, both production and consumption accounts of emissions declined (even as GDP rose), but per capita consumption accounts declined more than production accounts and mostly due to emissions reductions from trade partners. Finally, this study may be of interest to policymakers and scientists, and like other scholars, we recommend that consumption-based inventories accompany production-based accounts when designing and assessing global GHG mitigation policy.

The asymmetric effect of renewable energy and trade on consumption-based CO2 emissions: The case of Italy.

Although numerous studies in the literature have been conducted to model CO2 emissions, there is a lack of empirical knowledge of consumption-based CO2 emissions, which are adjusted for international trade, specifically. Therefore, the present study aims to close this gap in the literature in the case of Italy, while capturing the asymmetric effect of trade, renewable energy, and economic growth on consumption-based CO2 emissions. The present study uses the Gregory-Hansen test for cointegration with regime shifts, Markov switching regression, nonlinear autoregressive distributed lag (NARDL), and frequency domain causality test. The study's outcomes reveal that (1) the asymmetric effect of import on consumption-based CO2 emissions is positive, implying that rising import is associated with declining consumption-based environmental quality; (2) export, renewable consumption, and economic growth reduce consumption-based CO2 emissions in Italy. Moreover, these outcomes are supported by the outcomes of the frequency domain causality test. These innovative insights may prompt policy-makers to implement eco-friendly methods, such as renewable energy distribution and environmental innovation, to achieve a greener future. Integr Environ Assess Manag 2022;18:784-795. © 2021 SETAC.

Consumption-based carbon emission and foreign direct investment in oil-producing Sub-Sahara African countries: the role of natural resources and urbanization

The intensification of international trade movements and economic interconnectivity has far-reaching implications for many macroeconomic indicators, not to mention ecological consequences. To this end, this analysis examines the dynamic interaction between foreign direct investment (FDI), natural resources, economic advancement, and urbanization on consumption-based carbon emission which is adjusted to global trade for oil-producing Sub-Saharan Africa countries. The time frame for this analysis is from 1990 to 2018. To examine the nature of relationship between the outlined variables, a balanced panel econometric analysis alongside augmented mean group (AMG), common correlated effect mean group (CCEMG), and the Driscoll-Kraay(DK) OLS techniques while the system-GMM was utilized for robustness purposes. The outcomes reveal that income increases consumption-based carbon emission within the range of 0.668 to 1.1333%; natural resources also increase consumption-based carbon emission within the range of 0.0159 to 0.2304%; FDI on the other hand increases consumption-based carbon emission around 0.0156 to 0.186%, while urbanization increases consumption-based carbon emission within the range of 0.0231 to 0.6176% in the long run. Thus, there is a positive relationship between consumption-based carbon emission and all the understudied variables within the oil-producing Sub-Sahara Africa countries thereby affirming the pollutant haven hypothesis for the countries on the premises that foreign direct investment inflow has a detrimental influence on the receiving economies alongside natural resource. Hence, the outcomes suggest the need to pursue low-carbon strategies for a cleaner and friendly environment.

Large inter-city inequality in consumption-based CO2 emissions for China's pearl river basin cities

Cities are leading carbon mitigation but are heterogeneous in their mitigation policies due to different socioeconomic backgrounds. Given that cities are increasingly inextricably linked, formulating mitigation policies of different cities cannot be easily achieved without comprehensive carbon inventories, who taking the inter-city supply chains into account. The Pearl River Basin is one of the important economic zones in China, with huge disparity in its cities, but very limited information is available on their consumption-based CO2 emissions. To fill this gap, we compiled a consumption-based inventory of 47 cities in the Basin for 2012. We found that the total consumption-based emissions of 47 cities was 933.8 Mt, accounting for 13.1% of China's emissions. There were huge differences in the consumption-based emissions, ranging from 3.6 Mt (Heyuan City) to 153.1 Mt (Shenzhen City). The consumption-based emissions were highly concentrated in the largest seven cities, which accounted for 52.8% of the total emissions of the Basin. The consumption-based emissions per capita also varied greatly, from 1.2 to 14.5 tons per capita. Large scale infrastructure was the biggest driving force for most cities, resulting in 42.1% to 75.6% of the emissions. At sector-level, construction, heavy industry and services were leading in emissions, contributing more than 80% of emissions. The major inter-city carbon transfers occurred within upstream cities in the developing regions and downstream cities in the Pearl River Delta respectively, instead of the transfers between upstream and downstream cities. The findings highlight that the regional mitigation strategies could mainly focus on cities in intra-province boundary, rather than inter-province boundary, and also the city-level mitigation strategies should pay attention to the key emission sectors and drivers in respect of the heterogeneity of cities.

Decoupling without outsourcing? How China’s consumption-based CO2 emissions have plateaued

SummaryThe shift of China’s economy since 2013, dubbed the “new normal”, has caused its production and consumption emissions to plateau, with the country seeming to embody the tantalizing promise of decoupling its economic growth from carbon emissions. By using multi-region input-output analysis, we find that China’s relative decoupling in the new normal is technology driven, evidenced by the narrowing gap between its technology-adjusted and non-adjusted consumption emissions. By applying structural decomposition analysis, we further explore the driving forces behind the slowdown in China’s imported emissions growth, finding that it is attributable to restructuring of import patterns resulting from changes in the structures of domestic demand. These changes could have been caused by China moving along the global value chain and rebalancing its industrial linkages toward trade in carbon-efficient goods to avoid transferring emissions-intensive production to other regions, indicating a shift to less emissions-intensive trade rather than pure outsourcing.

Does renewable energy electricity and economic complexity index help to achieve carbon neutrality target of top exporting countries?

Despite extensive studies into international trade and CO2 pollution, a panel of only top exporting economies was not considered. As the current research is an endeavor to address the gap by exploring the impact of economic complexity index (ECI) and renewable energy electricity (RELC) on consumption-based carbon emissions (CCO2) in the presences of exports, imports, and gross domestic product (GDP) in the top exporting countries from 1990 to 2019. The results confirm a relationship between consumption-based carbon emissions, economic complexity index, renewable energy electricity, exports, imports, and economic growth in both the short-run and long run. Empirical evidence for cross-sectional auto-regressive distributed lags (CS-ARDL) estimates, confirms that economic complexity index imports and GDP are positively associated and have significant adverse short-run and long-run impacts on consumption-based carbon emission. Whereas, export and renewable energy electricity significantly reduce carbon emissions. To achieve carbon neutrality target, policymakers should make economic complexity reforms, import green products, and promote investments in sustainable sources.

Global greenhouse gas emissions from animal-based foods are twice those of plant-based foods.

Agriculture and land use are major sources of greenhouse gas (GHG) emissions but previous estimates were either highly aggregate or provided spatial details for subsectors obtained via different methodologies. Using a model-data integration approach that ensures full consistency between subsectors, we provide spatially explicit estimates of production- and consumption-based GHG emissions worldwide from plant- and animal-based human food in circa 2010. Global GHG emissions from the production of food were found to be 17,318 ± 1,675 TgCO2eq yr-1, of which 57% corresponds to the production of animal-based food (including livestock feed), 29% to plant-based foods and 14% to other utilizations. Farmland management and land-use change represented major shares of total emissions (38% and 29%, respectively), whereas rice and beef were the largest contributing plant- and animal-based commodities (12% and 25%, respectively), and South and Southeast Asia and South America were the largest emitters of production-based GHGs.

Provinces with transitions in industrial structure and energy mix performed best in climate change mitigation in China

China has announced its goal of reaching carbon neutrality before 2060, which will be challenging because the country is still on a path towards peak carbon emissions in approximately 2030. Carbon emissions in China did decline from 2013 to 2016, following a continuous increase since the turn of the century. Here we evaluate regional efforts and motivations in promoting carbon emission reduction during this period. Based on a climate change mitigation index, we pinpoint the leading and lagging provinces in emission reduction. The results show that achievements in industrial transition and non-fossil fuel development determined the leading provinces. Thus, the recommended solution for carbon neutrality in China is to promote the transformation of industrial structure and energy mix. In addition, policymakers should be alert to the path of energy outsourcing to reduce carbon emissions. Consumption-based emissions accounting and interregional cooperation are suggested to motivate developed regions to take more responsibility for climate change mitigation.

Analysis of carbon emissions embodied in South Korea's international trade: Production-based and consumption-based perspectives

Growing international trade is likely to become a major obstacle in reducing carbon emissions. Research that estimates trade-related emissions and analyzes the sources will be important to overcoming this obstacle. With this in mind, the current paper investigates carbon emissions embodied in South Korea's trade during 2000–2014. Using multi-regional input-output analysis, we find large increases in emissions embodied in exports (production-based emissions) and imports (consumption-based emissions) which drove increases in Korean emissions. Over time, Korea's net carbon exports grew alongside its net value-added exports, implying a greater trade-off between the environmental costs and economic benefits of trade. However, emission intensities of exports and imports both fell which suggests improvements in emission efficiencies at home and abroad. Analysis of bilateral trade shows that growth in trade with China accounted for the largest share of increases in Korea's embodied emissions. Analysis at the sectoral level shows high levels of emissions relative to value added in basic materials and transportation services but low levels of emissions relative to value added in electronic and mechanical equipment and transportation equipment. Lastly, structural decomposition analysis indicates that improvements in emission intensities limited growth in emissions, while rising levels of final demand expanded growth in emissions. As the first extensive study to analyze the drivers of changes in Korea's carbon emissions embodied in multilateral exports and imports, this paper recommends various abatement policies to effectively reduce emissions.

Revealing embedded carbon emissions within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), representing approximately USD 13.5 trillion of the global GDP, is one of the largest free-trade agreements in the world. This trade agreement considers many important issues yet fails to address climate change or carbon dioxide (CO2) emissions. CO2 emissions in trade are critical as all CPTPP parties have made significant carbon emissions reduction commitments of between 8-36% through the COP21- Paris Agreement. Herein lies a paradox. This study assesses the amount of embedded CO2 emissions in the CPTPP through an input-output analysis of consumption-based emissions in ten carbon-intensive sectors, under three scenarios. The results reveal that as trade between partners increases, so will CO2 emissions across those sectors. These findings are essential for policymakers who are striving to grow Partnerships (Sustainable Development Goal 17) while seeking to address Climate Action (Sustainable Development Goal 13), which appear to be conflicting goals.

International trade and consumption-based carbon emissions: evaluating the role of composite risk for RCEP economies.

To tackle the issue of climate change and environmental degradation debates regarding carbon neutrality is on the rise. Regional Comprehensive Economic Cooperation (RCEP), the leading trading union, covers nearly third of global economy, world population, is responsible for thirty percent of global trade and global gross domestic product. The existent study tests the impact of financial, economic, political, and composite risk on consumption-based carbon dioxide emissions (CCO2) in selected RCEP economies during the period of 1990 to 2020. The empirical analysis consists of cross-sectional dependence, slope heterogeneity, cross-sectional augmented panel unit root test, Westerlund cointegration, second-generation cross-section augmented autoregressive distributed lags model (CS-ARDL), and panel causality test. Further, we explore the role of imports, renewable energy supply, exports, and gross domestic product per-capita on CCO2. The empirical results suggest that the less political risk help to mitigate while the lower financial, economic, and composite risk increase CCO2 emissions in selected RCEP economies. Moreover, exports and renewable energy supply show mitigating effect, whereas imports show upsurge in CCO2. Additionally, a bidirectional causality exists between exports and CCO2, imports and CCO2, GDP per-capita and CCO2, political risk and CCO2, and renewable energy and CCO2 emissions, while a one-way causality from financial risk, composite risk, and economic risk to CCO2. Renewable energy supplies along with the improvement in sub-components of political risk, for instance, corruption, government stability, would help to effectively tackle the issue of CCO2 emissions.

Environmental cost of natural resource rents based on production and consumption inventories of carbon emissions: Assessing the role of institutional quality

The association between resource rents, energy intensity, trade and disaggregated CO2 emissions is examined for 93 nations spanning 23 years (1995–2017), while accounting for the quality of government (QoG). The results show that natural resource rents have positive and statistically significant impact on both consumption-based and production-based carbon emissions in the Low QoG countries. For the Upper-High QoG countries, the estimates show statistically insignificant impact on consumption-based carbon emissions and significantly negative (decreasing) impact on production-based emissions. The results also provide evidence that economic growth and import trade have stronger degrading impact on the environment in the Low QoG countries. Based on these results, we conclude that quality of governance plays important role in how natural resources rents are used and consequently their impacts.