Production-based CO2 Emissions Research Articles

A Study Regarding the Relationship between Carbon Emissions, Energy Consumption, and Economic Development in the Context of the Energy Growth Nexus

As the EU strives to achieve its climate goals, it is becoming increasingly crucial to understand the complex relationships between economic activity, energy consumption, and carbon emissions. In this context, our paper aims to investigate the correlation between carbon emissions, energy consumption, and economic development. To fulfill our aim, we have used Eurostat and OECD data for the EU-27 member states for a period of 13 years (2010–2022), using a linear regression as the main analysis method. Our results have shown that there is a strong correlation between demand-based and production-based CO2 emissions as well as between production-based CO2 emissions and final energy consumption, while at the same time, our findings have shown that there is no direct correlation between energy consumption and economic development, aligning our study with the neutrality hypothesis of the energy growth nexus. This paper expands the ongoing discussion on sustainable development and climate change mitigation by conducting a thorough analysis of the EU-27 countries over a span of thirteen years. The results emphasize the need for integrated strategies that address both production and consumption emissions, emphasize the vital role of energy efficiency, and raise questions about the effectiveness of increasing energy consumption to enhance economic productivity or CO2 efficiency.

The asymmetric and long-run effect of demand-based CO2 emissions productivity on production-based CO2 emissions in the UK

Trade effects on atmospheric air contamination of countries have received increasing global policy focus over the past few decades. The United Kingdom is committed to changing the complexities in international trade, current pathways to economic output pursuit, and carbon dioxide emission toward realizing the goals of the Paris Agreement and Kyoto Protocol. This research is motivated to explore the asymmetric long-run impact of demand-based CO2 emissions productivity on production-based CO2 emissions for the UK economy. Data for this assessment was drawn from 1990 to 2019 and analyzed using Gregory-Hansen cointegration, nonlinear autoregressive distributed lag (NARDL), and frequency domain causality techniques. Gregory-Hansen estimates for cointegration provide integration evidence for all variables. Estimates for NARDL long-run cointegration indicate (i) demand-based CO2 emissions productivity is a credible variable that contributes to reducing production-based CO2 emissions in the UK; (ii) both economic output and globalization contribute in rising production-based CO2 emissions in the UK; and (iii) the frequency domain causality test indicates one direction causality from demand-based CO2 emissions productivity, output, globalization, and consumption of green energy to production-based CO2 emissions in the UK.

Green Growth Analysis of Social Development in OECD Countries

This paper seeks to elucidate the inter and intrarelationships between a selected set of OECD green growth indicators (GGI). In addition to the selected GGI, the analysis includes the Human Development Index (HDI) and its sub-indicators. The novelty of the analysis comes from the incorporation of these established indicators, which have been utilised and developed to reflect human well-being and prosperity for decades. Production-based CO2 intensity and emission change are significantly correlated to average length of schooling across the 36 countries that were members of the OECD in the year 2019. Longer years spent in school on average can facilitate the green transition of countries. The correlations among intra-GGI also suggest where OECD countries are lagging in terms of green transition. For example, renewable energy supply share in energy and air transport-related CO2 per capita are positively correlated in the countries. This indicates that countries with a successful path toward green energy are not paying much attention to their high level of CO2 emissions caused by aviation. Infrastructural and technological advancement as well as increased public awareness are needed to challenge such issues.

Geopolitical risk, economic uncertainty, and militarization: Significant agents of energy consumption and environmental quality

This study estimates the unattended linkages from geopolitical risk (GPRI), economic uncertainty (EUI), and militarization (GMI) to environmental quality through production-based CO2 emissions, primary energy consumption, and GHG emissions. For this purpose, the study consumes data from Brazil, China, India, Russia, and South Africa (BRICS) between 2000 and 2021. Using the updated econometric algorithms, the continuously updated and fully modified (CupFM) and continuously updated and bias-corrected (CupBC), the results infer that both GPRI and GMI are degrading the environmental quality. In contrast, economic uncertainty tends to decline environmental degradation, energy usage, and greenhouse gas emissions in the long run. Similarly, economic growth and population both have negative responses to environmental degradation. The causal dimensions have explored that GPRI and EUI have bidirectional while GMI has unidirectionally Granger causes the environment. Similarly, EUI is bidirectionally, while GMI unidirectionally causes energy consumption. The study results discussed various policies based on GPRI, EUI, and GMI outcomes to improve the environmental quality for sustainable development.

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.

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.

Competitive Sustainability of Saudi Companies through Digitalization and the Circular Carbon Economy Model: A Bold Contribution to the Vision 2030 Agenda in Saudi Arabia

This study examines the challenges and opportunities of implementing the circular carbon economy model and digitalization in Saudi Arabia with a focus on CO2 emissions. The research finds that, prior to the pandemic outbreak in 2020, Saudi Arabia had succeeded in stabilizing production-based CO2 emissions due to a combination of policies outlined in the scope of Saudi Arabia’s Vision 2030. However, the economic downturn caused by the pandemic has led to a short-term reduction in CO2 emissions trends, highlighting the need for preparation for a rebound. Driven by the use of analytical methods including the Kaya Identity, this study suggests that the newly proposed circular carbon economy model could be an effective way for the country to mitigate greenhouse gas emissions by coordinating all significant stakeholders, including businesses and government actors. The research analyzes Saudi Arabia’s CO2 emissions trends over the past two decades and presents several steps necessary to achieve social, environmental, and economic outcomes for sustainable businesses operating in a fossil-rich country. We also highlight the need for organizational changes, new policy-making tools, as well as government, consumer, and stakeholder support to drive the changes required for integration of the circular carbon economy model and the adoption of smart technologies. Overall, the results can be used to emphasize the importance of sustainability as a competitive feature that allows businesses and countries to benefit from the distribution of risks and shared accountability.

Asymmetric effect of political stability on production-based CO2 emissions in the UK: long-run evidence from nonlinear ARDL and frequency domain causality.

The study deals with the effect of political stability on environmental degradation in the long run for the United Kingdom (UK). For this aim, the political stability effect on production-based carbon dioxide (CO2) emissions is examined by considering trade openness, renewable energy, and economic growth and using quarterly data between 1995/Q1 and 2018/Q4. Nonlinear autoregressive distributed lag (NARDL), which allows the researcher to measure the asymmetric impact of explanatory indicators positively or negatively, is performed as the empirical approach. Also, Breitung & Candelon (BC) frequency domain causality test is applied to measure the causality effect of explanatory variables on CO2 emissions. The results reveal that (i) political stability has a statistically significant effect on production-based CO2 emissions and positive shocks have a higher power than negative shocks; (ii) economic growth has an increasing effect, whereas renewable energy has a decreasing effect on production-based CO2 emissions; and (iii) there is frequency domain causality from political risk, economic growth, renewable energy consumption, and trade openness to production-based CO2 emissions. Hence, empirical results highlight the asymmetric effect of political stability on environmental degradation in the long run for UK. Thus, UK policymakers should consider political stability in policy development and implementation process for limiting CO2 emissions in the long run.

The impact of financial crises on the relationship between imports, exports, and consumption-based CO2 emissions: Do country income levels matter?

Unlike most extant research that uses production-based CO2 emissions to examine the links between exports/imports and CO2 emissions, in this paper we use consumption-based CO2 emissions to examine the impact of the 2008 global financial crises on the stated relationship for a select sample of countries arranged by income levels. Using the common correlated effects estimator methodology and annual data over the 1990–2019 period, we examine the impact of the 2008 crisis on the stated relationship for a group of high-income, upper middle-income, and lower middle-income countries. Our results suggest that the global financial crisis significantly altered the high-income and lower middle-income countries in terms of the relationship between exports and pollution. The crisis also impacted the lower middle-income countries in terms of the imports/pollution relationship. These findings suggest that a country’s income level is important when considering the relationship between exports/imports and pollution following a crisis.

Discerning the role of renewable energy and energy efficiency in finding the path to cleaner consumption and production patterns: New insights from developing economies

This study provides empirical evidence on the relationship between energy efficiency and production- and-consumption based carbon emissions by assessing the impact of population size, income, and clean energy on the carbon dioxide (CO2) emissions function. Method of Moments Quantile Regression (MM-QR) and Augmented Mean Group (AMG) estimators are applied to observe long-term associations between the variables, and Dumitrescu-Hurlin (DH) Ganger causality test is used to identify the direction of causality. Findings reveal that, across all specifications, energy intensity and population size have positive (increasing) impact on both estimates of CO2 emissions while renewable energy use has a negatively significant impact and stronger on consumption-based estimates. The presence of an inverted U-shaped curve in the relationship between per capita income and CO2 emissions, as predicted by the Environment Kuznets curve (EKC) hypothesis, only exists when CO2 emissions are calculated based on production pattern. Further empirical analysis based on DH causality tests show a bidirectional causality between energy intensity and production-based CO2 emissions, population size and consumption-based CO2 emissions, per capita income and consumption-based CO2 emissions, and energy intensity and renewable energy use. In addition, a unidirectional causality runs from per capita income to production-based CO2 emissions, and from energy intensity and renewable energy use to consumption-based CO2 emissions. This analysis outlines a paradigm for the formulation of a green development strategy in developing economies via energy and environmental resources.

Exploring the asymmetric determinants of consumption and production-based CO2 emissions in China.

Environmental pollution has intensified significantly in the last few decades. Policymakers have considered this issue due to its direct influence on human lives throughout the globe. This study explores the asymmetric determinants of consumption-based and production-based CO2 emissions for China, for time horizon 1990-2019. ARDL and NARDL regression approaches have been adopted for empirical investigation. The ARDL regression method reveals that GDP does not produce any impact on production-based and consumption-based CO2 emissions, while energy use contributes as an increasing determinant of consumption-based and production-based CO2 emissions in the long-run. The NARDL regression method reveals that a positive shock in GDP is beneficial for a decline of consumption-based CO2 emissions, while it does not reduce production-based CO2 emissions in the long-run. However, negative shock in GDP contributes as an increasing determinant of consumption-based CO2 emissions. Results also report that positive shock in energy use behaves as an increasing agent of consumption-based and production-based CO2 emissions in the long-run, while negative shock in energy use produces a decline in production-based CO2 emissions in the long-run. Thus, policymakers should adopt such demand and supply sides' management policies that contribute to controlling CO2 emissions.

Export quality upgrading and environmental sustainability: Evidence from the East Asia and Pacific Region

In this study, we examine the effect of export quality upgrading through evolution of energy mix and transportation on environmental sustainability using panel cointegration techniques. Utilizing a dataset of East Asia and Pacific countries, we find that the export quality amelioration of goods and services tends to increase the carbon-produced intensity. Economically, a 1% rise in the export quality index could surge CO2 emissions by 0.71%. However, such a relationship is nonlinear as reflected through an inverted U-shaped linkage between export quality and environmental performance, i.e., evolution in energy use, economic growth, transportation and trade openness can reduce CO2 emissions when it reaches a certain threshold. The main results survive when we re-estimate all models by substituting production-based CO2 emissions by Consumption Emissions and Economic Complexity Index of Hidalgo and Haussmann.

How do sources of carbon dioxide emissions affect life expectancy? Insights from 68 developing and emerging economies

This study is possibly the first to investigate the impact of carbon dioxide (CO2) emissions on life expectancy for 68 low- and middle-income countries for the 1990–2017 period. The analysis was carried out on a disaggregated basis on two dimensions: (1) the sources of CO2 emissions (i.e., consumption-based or production-based CO2 emissions) and (2) the level of economic development (i.e., developing or emerging) of countries. The results support the evidence of a negative association between life expectancy and CO2 emissions for the whole sample as well as for the group of emerging countries. This finding occurred irrespective of whether the CO2 emissions were consumption-based or production-based, suggesting that both consumption and production may reduce the life expectancy of the people in these groups of economies through the generation of harmful pollutants. In contrast, CO2 emissions, regardless of their sources, seem to improve the life expectancy of those in the group of developing countries in our study sample. In this regard, developing countries seem to be effectively importing emissions. Our findings suggest that the favorable impact of CO2 emissions on life expectancy is attributable to consumption rather than production. Furthermore, income growth alone cannot provide a solution for environmental degradation nor ensure a healthier life for the population.

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.

The Effect of Sustainable Development on Economic Complexity in OECD Countries

Economic complexity showing a holistic measure of countries' economic productive power and characteristics has become a new tool for understanding the dynamics of the economy. Examining the relationship between sustainable development and this new tool is vital in determining new policies. By applying panel data of OECD countries covering different development levels from 1996 to 2017 to a data-driven dynamic econometric model, the research provides fresh insight between sustainable development and economic complexity. The results indicate that economic complexity is significantly affected by sustainable developments’ economic indicators such as GDP, FDI, R&D expenditure, social indicators such as human development, income inequality, and environmental indicators such as production-based CO2 emissions, renewable energy consumption, and greenhouse gas. The research, consequently, suggests that switching to technology and knowledge-based production processes, expanding qualified production factor capacity, raising social living standards, and making investments in the green economy will foster economic complexity while ensuring stable sustainability.

Does the Belt and Road Initiative Really Increase CO2 Emissions?

There are debates on whether the implementation of the Belt and Road (BR) initiative could significantly increase CO2 emissions in participating countries. Nevertheless, the policy effect of the BR initiative on both consumption- and production-based CO2 emissions has not been fully explored. In this study, we quantified the consumption- and production-based CO2 emissions in BR countries with a multiregional input–output model. Then, a difference-in-differences (DID) model was used to identify the CO2 emissions caused by the BR initiative. Results showed that the production-based CO2 emissions (20.77 Gt) were 11 percent higher than the consumption-based CO2 emissions (18.71 Gt) in BR countries. The BR initiative had a significant, positive effect on per-capita consumption-based CO2 emissions (p value < 0.1), with an average increase of 0.51 t/cap/year, but had no significant effect on per-capita production-based CO2 emissions (p value > 0.1). These results imply that the BR initiative promoted regional consumption to achieve common prosperity and boosted green transformation of regional economy. Moreover, non-BR countries that have consumed CO2-embedded products should take responsibility for the CO2 emitted in BR countries. Participants should give priority to strengthening the cooperation based on their country’s infrastructure conditions rather than the proximity to China. These findings clarify the policy effect of the BR initiative and distinguish the CO2 emission responsibility from both consumption- and production-based perspectives.

CO2 emissions from the electricity sector during China's economic transition: from the production to the consumption perspective

Abstract China's economy has entered the ‘New Normal’ era, transferring from the fast growth to the medium-high growth with ambitious targets on climate change mitigation and pollution alleviation. As the largest CO2 source among all industrial sectors, the electricity sector plays an important role in China's recent stagnating CO2 emissions and achieving mitigation targets. Here we estimate CO2 emissions from electricity production by using up-to-date emission factors and calculate the CO2 emissions embodied in purchased electricity using the Quasi-Input-Output (QIO) model. In addition, we quantify the drivers of CO2 emissions from electricity production and consumption using the index and structural decomposition analysis. Our results show that China's economic transition and increasing electricity intensity largely contributed to the growth of CO2 emissions in the electricity sector, while the improvement of energy efficiency, non-fossil fuel substitution, and shrinking share of industrial output reduced CO2 emissions. The consumption-based CO2 emissions in developed regions in China are higher than their production-based CO2 emissions in 12 provinces. The recent slowing down of economic growth, energy transition, improved efficiency, non-fossil fuel substitution, and electricity trade have altered the CO2 trajectory in the electricity sector since 2008 global financial crisis. This study could help policymakers better understand CO2 emissions in the electricity sector and formulate effective policies to decarbonize the electricity sector in the future.

Identifying the key sectors for regional energy, water and carbon footprints from production-, consumption- and network-based perspectives

Energy consumption, water use and carbon emission targets are important for promoting sustainable development. This study presents a multi-goal analytical framework based on an environmental input-output analysis, structural path analysis and correspondence analysis to identify the key sectors for energy, water and carbon footprints. Using Guangdong Province as a case study, the energy, water and carbon footprints are modelled from production-based, consumption-based and network (betweenness)-based perspectives. The results show that (1) the construction sector is a key sector for energy use/water use/carbon emissions from the three perspectives. The electricity and heat power production and supply sector emitted the most production-based CO2 (283.4 Mt), accounting for 52.3% of the total CO2 emissions. (2) The key sectors in terms of energy, water and carbon differ. The transport, storage and post sector is an important sector for energy consumption, and the agriculture sector and food and tobacco sector are important sectors for freshwater withdrawal. (3) The key sectors differ according to the three perspectives. For example, the energy production sector ranked first in production-based CO2 emissions (286.2 Mt), but heavy manufacturing ranked first in consumption-based CO2 emissions (146.3 Mt). This study recommends paying more attention to the abovementioned sectors, specifically concerning the transmission role of light manufacturing in freshwater withdrawal, and reducing energy consumption-intensive but low value-added exports (such as metal smelting and pressing). The findings highlight the need to consider multiple angles and elements to identify the key sectors and help decision makers better understand the relationships and flows among the industries.

A multi-perspective factorial hypothetical simulation model for cutting the carbon emission intensity of China

Climate change is a huge threat to our globe. As the largest CO2 emitter and the biggest developing country in the world, China has pledged to cut its national carbon emission intensity (NCEI). The objective of this study is to develop a multi-perspective factorial hypothetical simulation model to facilitate the policy development for robust NCEI reduction. Based on multi-regional input-output model and hypothetical extraction method, the individual- and the system-based effects of 900 sectors on NCEI are investigated. Then, targeted countermeasures against key sectors are developed. After that, the effects and the complex interactions of the countermeasures on the system robustness and the system sustainability are examined by factorial analysis. The results reveal that it is feasible to cut NCEI of China through the proper adjustments of a few sectors, while some of them may at the cost of the system health. For example, controlling the production-based CO2 emission of Electricity and hot water production and supply in Shandong and shrinking the production scale of Metallurgy in Hebei could efficiently cut China’s NCEI. However, the two countermeasures would deteriorate the system health through their main effects and interaction. These findings can provide new information for achieving China’s NCEI goal.

In-and-Beyond State Power: How Political Equality Moderates the Economic Growth-CO2 Emissions Relationship, 1990-2014

ABSTRACT This study tests whether greater political equality at the nation-state level moderates economic growth’s association with production-based and consumption-based CO2 emissions. Based on data for 106 nations from 1990 to 2014, this study finds that greater political equality mitigates both types of emissions, but when interacted with economic growth, it intensifies growth’s association with emissions. Conversely, political equality mitigates emissions when the economy is stagnant or contracts, but has no effect on emissions during times of economic expansion. The results are homogeneous across country income groups. These findings suggest that greater political equality is likely a necessary but insufficient condition to mitigate CO2 emissions.