Production-based Carbon Emissions Research Articles

Does green finance reduce environmental degradation? The role of green innovation, environmental tax, and geopolitical risk in China

In the last few decades, China has faced the pressing effects of climate change due to its rapid progress in industrialization and economic expansion. China has taken the lead in developing aggressive plans to reduce environmental degradation. Considering this, several studies conclude that green finance, green innovation, and environmental taxation stand out as the most efficacious strategies for reducing environmental degradation. Also, geopolitical concerns can make it difficult to implement plans, particularly when there is political unrest, hostilities, or hostility between countries. Therefore, this work explores the influence of green finance, green innovation, environmental tax, and geopolitical risk to mitigate environmental degradation in China. This research employed a novel dynamic ARDL simulation model for long-run association, KRLS for robustness check, and frequency domain causality for checking casual relationships from 1990 to 2020. The findings indicated that green finance, green innovation, and environmental tax mitigate the consumption and production-based carbon emissions, while geopolitical risk has adverse implications for environmental sustainability. The frequency domain causality test findings suggested that green finance, green innovation, environmental tax, and geopolitical risk have long-term casual associations in both models. These findings provide specific policy suggestions to assist China in reducing environmental deterioration and achieving the SDGs.

Determinants of consumption-based and production-based carbon emissions

Determinants of consumption-based and production-based carbon emissions

Managing Carbon Efficiency and Carbon Equity

China has committed to achieving carbon neutrality by 2060, primarily focusing on reducing carbon intensity. Understanding the regional embodied carbon emissions is critical for managing carbon efficiency and carbon equity in this process. Using the input-output and SBM-DEA models, this article first calculates China's regional embodied carbon emissions. The results reveal substantial carbon transfers between China's different regions. Therefore, designing reduction pathways solely based on production-based carbon emissions raises fairness concerns. To address this, this article employs the SBM-DEA model to calculate the regional reduction potential and marginal abatement costs using the regional embodied carbon emissions and optimize China's pathways of regional carbon emission reduction. The new pathways consider consumption-based reduction potential, marginal abatement cost, and reduction equity, and are all in line with China's carbon reduction target. These schemes are of practical significance for China to develop a more efficient and equitable regional emission reduction plan.

Natural resources, environmental policies and renewable energy resources for production-based emissions: OECD economies evidence

Economic growth and environmental degradation are consistently increasing in developed economies due to expansion in the industrial sector and excessive use of natural resources. As a result, production-based carbon emissions increased during the last three decades, for which scholars have recommended several remedial measures. This study investigates the importance of natural resources and environmental regulations in attaining environmental sustainability via reducing production-based emissions in 21 OECD economies. Besides, the role of renewable electricity output and economic growth is also considered. This study uses several cointegration tests and concludes that the long-run association between the variables existed between 1990 and 2020. Due to the non-linearity issue, this study uses the method of moment quantile regression, which indicates natural resources and economic growth as the primary factor of production-based emission. However, stringent environmental policies increased environmental tax, and improved renewable electricity significantly reduced production-based emissions, leading to environmental sustainability. This study uses parametric estimation techniques to authenticate the empirical results and bidirectional causal connections between the variables. This study suggests further strengthening environmental management via stringent environmental policy, imposing an enhanced environmental tax on extensive carbon sectors, and investing in renewable electricity generation.

Carbon emissions embedded in China's paper trade: Estimated outcomes of alternative approaches

China is one of the largest exporters of paper products. Along the global value chains (GVCs), specialization and segmentation result in paper products, as well as the intermediate inputs associated with their manufacturing, in one country to be consumed by other countries. This results in the carbon flows embedded in the trade flows and, thus, an ignorance of potential carbon leakage due to production-based carbon emissions accounting. Using the multiregional input-output model and statistics from the World Input-Output Database, we employ a consumer-based accounting method to trace carbon emissions embodied in China's paper trade from 2000 to 2014. It is found that the carbon emissions embodied in China's paper exports were much larger than those of its imports. China's manufacturing and exporting of large amounts of paper products led to high carbon emissions within China. However, substantial carbon leakages can occur to the importing countries of China's paper products if the accounting is done from the production perspective. To reduce paper industry's carbon leakage and participate in GVCs more efficiently, it is also necessary for the country to upgrade the manufacturing technologies and processes.

Expansion of financial system and production-based carbon emissions: evidence from high-income countries

The recent environmental and energy economics is more influential towards sustainability of the environment. Unlike the existing literature covering extensively consumption-based carbon emissions factors, this research tends to identify the factors influencing production-based carbon emissions in the G7 economies from 1989 to 2020. The study utilised various panel econometric approaches to find the presence of cross-section dependence, stationarity of variables, and the validation of long-run cointegration association between the variables. This study uses a non-parametric long-run estimator (method of moment quantile regression) to explore the association between these variables at four (Q0.25, Q0.50, Q0.75, Q0.90) quantiles. The estimated results revealed that economic growth is a significant positive factor of production-based carbon emissions, whereas the influence of imports is positive but insignificant across the quantiles. On the other hand, this study found the negative and significant influence of exports and financial expansion on the production-based carbon emissions and helps to achieve environmental sustainability in the region. The non-parametric (bootstrap quantile regression) and parametric (robust regression) robustness tests also validate the earlier estimator’s empirical findings. Based on the results obtained, this study recommends increased investment in environmentally friendly energy resources, technologies, and energy efficiency, increased exports, and strengthening financial institutions.

Production- and consumption-based carbon emission decoupling and decomposition of the Belt and Road countries

The Belt and Road Initiative (BRI) provides a platform for developing countries with huge growth potentials, which may also face huge carbon emission pressure while achieving rapid economic growth. Given certain similarities in economic patterns and resource endowments, this study aims to trace carbon emission decoupling and decomposition of different countries/regions within the Belt and Road area and provide new insights into the drivers of carbon emission decoupling from both production- and consumption-based perspectives. Based on the multi-regional input-output modelling and Tapio decoupling decomposition, this study quantitatively analyzes the decoupling evolution and decomposition drivers of economic activities and carbon emissions in countries along the Belt and Road. From the results, the production-based carbon emissions of the Belt and Road countries was significantly higher than the consumption-based carbon emissions. The increasing rate in the production-based carbon emissions was also faster than the consumption-based one, with an increasing huge gap between the two sides. Regarding the spatial distribution of carbon emissions, the regions with huge amounts of carbon emissions mainly distributed in Russia, Iran, South Korea, and Saudi Arabia. When compared, the consumption-based carbon emissions of China and Russia were the highest, followed by those of the countries in Central Asia and West Asia. Compared with the production-based side, the decoupling rate of the Belt and Road countries was slower than the consumption-based one. The Belt and Road countries mainly maintained in the weak decoupling status, with the economic effect as the main driver in carbon emission growth, and the energy intensity effect as the dominated contributor in carbon emission reduction. Through exploring the decoupling and decomposition of production- and consumption-based carbon emissions within the Belt and Road countries, this study attempts to provide certain implications for the low-carbon transition and sustainable development within the countries along the Belt and Road.

Financial inclusion and trade adjusted carbon emissions: Evaluating the role of environment related taxes employing non‐parametric panel methods

AbstractTrade adjusted or consumption‐based carbon emissions relatively is a new area of research. Trade adjusted carbon emissions is adjusted by deducting exports, adding imports and production based carbon emissions. This measure enables to capture the importance or contribution of international trade to global carbon emissions. This study further highlights each country's contribution to global carbon emissions through trade. This study aims to explore the possible determinants of trade adjusted carbon emissions for group of seven economies from 2000–2020. This study used a novel index for financial inclusion along with the role of environment related taxes and environment related innovation is also tested. The study uses non parametric method of panel data, that is, method of moments quantile regression, along with panel cointegration and diagnostic tests to detect interdependence and heterogeneity in the slop. Moreover, this study also tested the role of exports and imports with GDP for trade adjusted carbon emissions. The empirical findings from this study suggest that exports, environment related innovation and taxes and financial inclusion cause a reduction in trade or consumption‐based carbon emissions. Moreover, both imports and gross domestic product cause an upsurge in consumption or trade adjusted carbon emissions. This study provides practical policy implications in the light of empirical findings related to environment related taxes, financial inclusion, exports, environment related innovations, imports and gross domestic product.

How does green technology innovation affect green growth in ASEAN-6 countries? Evidence from advance panel estimations

The ASEAN region is still majorly dependent on non-renewable sources, which emit more greenhouse emissions and are ranked as 3rd biggest emitter of greenhouse gases. Therefore the objective of the present study is to understand the role of green technology innovation and its effect on green growth. For said purpose, after accounting for the heterogeneity of the slope, cross section dependence, stationarity and cointegration on the dataset having yearly observations from 1992 to 2018, the application of CS-ARDL was made known for generating robust and consistent results by addressing the aforementioned statistical biases. The findings of CS-ARDL revealed that the relationship between technology innovation and renewable energy with carbon emissions and production-based carbon emissions was found to be negative. In contrast, non-renewable energy has a positive impact on carbon emissions and production-based carbon emissions. Moreover, the results were also validated by the AMG and CCEMG for both criterion variables, which are carbon emissions and production-based carbon emissions. Based on the findings, it is suggested that there is a need to channelize the research and development in order to improve the number of technological patents which help in controlling environmental degradation. The results and recommendations are discussed in further detail, where directions for future researchers are also proposed.

An Analysis of the Responsibilities and Driving Factors for Embodied Carbon in Trade

By adopting the consumption-based accounting (CBA) method of carbon emissions based on national carbon intensity (NCI), using the International Trade Centre (ITC) database, the Emissions Database for Global Atmospheric Research (EDGAR), and the World Bank database, and taking 13 countries and regions including the European Union (EU) countries and the United States (US) as research samples, this paper conducts an accounting of the embodied carbon in trade between China and other major economies in the world, clarifies the responsibilities China has taken for foreign consumption-based carbon emissions, and analyzes the various driving factors of China’s embodied carbon in exports. The findings are as follows: (i) Most of the developed economies have higher consumption-based emissions than production-based emissions, which is contrary to most of the developing economies, with developing countries bearing responsibilities for 15–20% of the consumption-based carbon emissions for developed countries; (ii) the carbon emissions of countries and regions are closely related to the embodied carbon in trade, with a correlation coefficient of 0.96. (iii) China has taken responsibility for a large amount of carbon emissions from foreign consumer demand, most of which are from the US, the EU, ASEAN, and Japan, respectively accounting for 3.8%, 3.5%, 2.3%, and 1.2% of China’s production-based carbon emissions in 2019; (iv) technique effect is the main driving factor for China’s embodied carbon in trade, while the specific driving factors vary by industry. Based on the above analysis, it is suggested that China should: (i) consider the trade factor in its efforts to achieve carbon peaking and carbon neutrality; (ii) adopt differentiated measures to reduce trade-related emissions for specific industries; (iii) fully consider China’s demand for carbon peaking and carbon neutrality in international negotiations; (iv) give more support to the research on and measurement of consumption-based carbon emissions.

Research on International Carbon Emission Responsibility Based on Tapio Decoupling Model

Based on the WIOD database, the article uses the MRIO model to analyze the production-based and consumption-based carbon emissions and transfer issues in international trade, measures the carbon emissions generated by the EU, China, India, Japan, Russia, and the US in 2014, uses the Tapio decoupling model to clarify the relationship between economic growth and carbon emissions, and determines the responsibility of carbon emissions in each country (region) using 2013 as the base period. The study found that: China and India are based on the production of carbon emissions. It is found that: production-based carbon emissions are higher than consumption-based emissions in China and India, and the opposite is true for EU, US, Japan, and Russia; developing countries are net exporters of trade-embodied carbon and developed countries are net importers of trade-embodied carbon; and a consumption-based accounting approach is used for EU and China, and a production-based accounting approach is used for India, Russia, Japan, and US.

Toward Sustainable Development: Assessing the Effects of Commercial Policies on Consumption and Production-Based Carbon Emissions in Developing Economies

Over the last few decades, the available literature on environmental economics hosts numerous environmental issues and underlines their reasons, calling for instant action on carbon dioxide emissions (CO2e). In the same context, the recent article develops a new framework that extends the pertinent literature by linking commercial policies, globalization, labor force, GDP growth, fossil fuel, and renewable energy consumption with consumption and production-based CO2e (CCO2e and PCO2e). To this end, the sample of developing economies is utilized from 1991 to 2016. Further, several advanced techniques are applied for robust findings. The findings reveal that the expansionary and contractionary commercial policies significantly affect CCO2e and PCO2e. Likewise, import taxes also have a significant association with CCO2e and PCO2e. Additionally, the results determine that globalization, labor force, GDP growth, fossil fuel, and renewable energy consumption are the essential drivers of environmental pollution. Besides, the panel causality test establishes a one-way causality which runs from commercial policies, import taxes, globalization, labor force, GDP growth, fossil fuel, and renewable energy consumption to CCO2e and PCO2e. Based on the findings, some relevant implications are also suggested.

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.

Research on global carbon emission flow and unequal environmental exchanges among regions

Global carbon emissions have become a huge problem, which greatly accelerates the process of global warming. However, the flow and exchange of carbon emissions caused by international trade has further increased the difficulty of determining carbon emissions responsibilities and advancing world’s emission reductions. Based on the multi-regional input-output (MRIO) model, this study analysed the flow and outsourcing of carbon emissions among six regions of the world in 2014, and applied the regional environmental inequality (REI) index to measure the unequal environmental exchanges among regions. We found that global carbon emissions reached nearly 35Gt, of which more than 20% were outsourced to other regions. Especially developed regions, such as EU 28, USA and Japan, had significantly higher consumption-based carbon emissions than production-based carbon emissions. The unequal environmental exchanges mainly occurred between developed regions and underdeveloped regions. This paper can help to distinguish emission responsibilities of various regions of the world, and contribute to world emission reduction policies.

Evolution and drivers of production-based carbon emissions in China and India: Differences and similarities

Added global carbon emissions have mainly come from China and India since 2012, which indicates importance of two countries in curbing global CO2 emissions. Thus, their respective mitigation lessons have more realistic significance in developing more effective mitigation strategy. This study compared the dynamic evolution of their CO2 emissions and driving factors behind changes, in order to find similarities and differences of two countries, and provide available policy implications to further reduce carbon emissions. Firstly, both China’s and India’s carbon emissions have been increasing during 2000-14: 3.4–9.9 Gt and 0.9–2.0 Gt, respectively. However, tendency of two countries varied differently: growth of China ’s CO2 have slowed down after the 2008 financial crisis, while India ’s emissions were still accelerating at a high level on account of growing share of carbon-intensive energy in the whole energy structure. From the national and sectoral perspectives, both trends of carbon emissions from two countries have been analyzed. According to structural decomposition analysis, efficiency gains and slowdown of economic growth in China contributed to most decline of CO2 but both production and consumption structures urged emissions up, while structure effects in India slightly reduced its CO2 but low emission efficiency and expansion of trade scales caused growth of emissions. On this basis, firstly, China should optimize production structures by upgrading industries, while India should promote energy transformation and improve energy efficiencies. Secondly, strengthening cooperation and communications with developed countries with advanced technology and experience may make more progress in climate change for two countries. Experience and lessons of emission reduction deriving from the two would also provide references for other regions.

New insight into aggressive Intended Nationally Determined Contributions in China – What lessons China should learn from Germany to reduce production-based carbon emission

The future sceneries of global carbon emission post-Paris climate accord rely on the implementing Intended Nationally Determined Contributions (INDCs), which is based on reducing production-based carbon emission. China and Germany are the world’s production centers, with the world’s largest trade surplus. A comparative analysis of production-based carbon emissions in China and Germany can service to implementing cost-effective and aggressive INDCs in China and Germany. To this end, the change trajectories and driving factors of production-based carbon emissions in China and Germany from 2000 to 2014 were investigated to use input-output method and decomposition techniques. The emission accounting results show that production-based carbon emission from 2000 to 2014 increased by 194% in China, whereas decreased by 17% in Germany. Embodied carbon emission flow analysis showed that sector structure of production-based carbon emissions in China and Germany was greatly different. The decomposition of production-based carbon emission showed that (i) the leading contributor in China was consumption structure in China, whereas the leading contributor in Germany was per capita consumption in Germany; (ii) production structure and consumption structure contributed to increasing the emission in China, but was offset the emission in Germany; (iii) the rapid decline in the carbon intensity coefficient offset emissions in both China and Germany. To implement more aggressive INDCs, China should learn the German example to optimize production and consumption structure, while continuously improve its carbon efficiency.

How China is fostering sustainable growth: the interplay of green investment and production-based emission.

To mitigate environmental problems and to achieve sustainability, China is striving to transition to low-carbon urban economies. Among several significant steps, the country has made remarkable success in controlling the emissions from transportation, buildings, and energy by shutting down or relocating several polluting industries. This study contributes to the issue of sustainable growth debate using time series data from China for the period 1998-2017 and empirically examines the effects of green investment and renewable energy consumption on production-based carbon emissions for China. The strength of this study is that it tested some new variables such as production-based carbon emissions and green investment. Using autoregressive distributed lag model (ARDL) cointegration technique, we found that production-based emission and its determinants move together in the long run. The study found that green investment and renewable energy consumption are both helpful in controlling production-based carbon emissions, while trade openness increases production-based carbon emissions. Hence, green investment and renewable energy consumption contribute to the achievement of sustainable growth. Moreover, based on a robustness check, human capital, financial development, and environment-specific technological innovation are found to be helpful in curbing production-based carbon emissions. Our study recommends financial technology (fin-tech), green investment, and public-private partnership investment in renewable energy to mitigate the effect of production-based carbon emissions.

The measurement and influencing factors of carbon transfers embodied in inter-provincial trade in China

Based on a measurement model for carbon transfers in bilateral trade between regions and an improved log-mean Divisia index decomposition method, this study estimates carbon transfers caused by inter-provincial demand and inter-provincial exports for 2007, 2010, and 2012 and investigates the main factors that affect net carbon transfers between provinces. The results show the following. First, in 2007–2012, the average carbon emissions caused by inter-provincial demand and inter-provincial exports account for about 35.4% and 8% of total production-based carbon emissions, respectively, which indicates that carbon transfers between provinces are widespread. Second, total carbon transfers caused by inter-provincial demand keep increasing, and in 2012, 19 provinces show net carbon outflows, and provinces located in the northern and central regions receive most net carbon inflows. By contrast, net carbon outflows induced by inter-provincial export keep decreasing and are concentrated in eight provinces in the Beijing–Tianjin, eastern, and southern coastal areas. Third, the scale and structural effects increase net carbon transfers between provinces in 2007–2010 and 2010–2012, respectively, whereas the technological effect reduces net carbon transfers between provinces in 2007–2012. Our empirical results suggest that carbon emissions and inter-provincial carbon transfers can be reduced effectively through inter-provincial cooperation and narrowing provincial differences in emissions reduction technology.

Temporal changes in China's production and consumption-based CO2 emissions and the factors contributing to changes

Abstract As the largest carbon emitter in the world, China is actively promoting carbon emission reduction and low-carbon sustainable development. To better formulate low-carbon transformation measures, we calculated and compared China's production-based carbon emissions (PD-CEs) and consumption-based carbon emissions (CD-CEs) from 2000 to 2014 based on the Multi-Regional Input–Output tables. We also performed a structural decomposition analysis (SDA) to investigate the factors contributing to changes in China's PD-CEs and CD-CEs. The study's findings are as follows: First, China's PD-CEs are continually larger than its CD-CEs, such that China is a net exporter of emissions. However, China's exported emissions and net exported emissions peaked at 2200 and 1786 Mt., respectively, as of 2007. In 2014, China's net exported emissions were 1371 Mt., down 23.25% compared with 2007. Second, China's PD-CEs mainly serve the domestic final demand, and China's CD-CEs are mainly emitted at home. Production and supply of electric power, steam and hot water is the biggest contributor to China's PD-CEs while Construction the largest contributor to China's CD-CEs. Third, the SDA results show that China's PD-CEs and CD-CEs mainly grew due to changes in China's final demand volume. The significant restraint to the growth of China's PD-CEs and CD-CEs is the effect of changes in the domestic emission intensity. Changes in China's ties with other economies have an important impact on China's carbon emissions. Developing economies are replacing developed economies as major destinations for China's emissions export. Fourth, the growth rate of China's PD-CEs and CD-CEs significantly slowed down and the factors contributing to the changes in China's PD-CEs and PD-CEs have changed after China's economy entered the new normal.

Trade and technological innovation: The catalysts for climate change and way forward for COP21

Following the adaptation of the Paris Agreement at COP21, it was noted that the traditional measures of carbon emissions have several limitations; and a reliable and relevant carbon emissions measurement is important to formulate a response to the challenge of climate change. This study, therefore, explores the relationship between international trade and consumption-based carbon emissions, which is a trade adjusted indicator; and measures the outflow and the inflow of emissions through exports and imports separately. We also include technological innovation in the model to understand its impact on consumption-based carbon emissions. The results show that exports and consumption-based carbon emissions are negatively associated, and technological innovation helps reducing the adverse effect of CO2 growth. In contrast, Imports and gross domestic product are positively linked with consumption-based carbon emissions. The findings also suggest the countries which embraced the Paris Climate Agreement must focus on consumption-based carbon emissions rather than the production-based carbon emissions.