Biomass energy,technological progress and the environmental Kuznets curve: Evidence from selected European countries

We examine the causal relationship between economic growth and CO₂ emissions in a panel of 24 European countries from 1980 to 2010. Using an analytical framework that considers pooled mean group estimations in a dynamic heterogeneous panel setting, we show that there is an inverted U-shaped relationship between CO₂ emissions and economic growth in the long run and that there is no such relationship in the short run. In particular, we find that biomass energy is insignificantly linked to CO₂ emission. However, technological innovation significantly facilitates reduction of CO₂ emissions in the investigated countries. Altogether, our study implies that economic growth and environmental quality can be achieved simultaneously, which opens up new insights for policy-makers for sustainable economic development via implementation of renewable energy consumption through technological innovation.     

On the relationships between CO2 emissions,energy consumption and income: The importance of time variation

The environment that governs the relationships between energy consumption, carbon dioxide (CO₂) emissions and gross domestic product (GDP) in the G7 countries changes over time due to variations in economic growth, regulatory policy and technology. Using a novel approach that may detect causalities when the time-constant hypothesis is rejected, we find significant time-varying Granger causalities among the variables under consideration. There is bidirectional causality between GDP and energy consumption for Japan, unidirectional causality running from GDP to energy consumption for Italy, and unidirectional causality running from energy consumption to GDP for the resource country Canada. Moreover, the results also show a bidirectional time-varying causality between energy consumption and CO₂ emissions for the United States, and causality from energy consumption to CO₂ emissions for France. Finally, while we find significant time-varying causalities running from GDP to CO₂ emissions for Italy and Japan, the finding of inverted N-shaped curves (Italy and Japan) lends no support to the traditional Environmental Kuznets Curve (EKC) hypothesis for these countries. It implies that environmental policy and economic growth should go hand in hand. Other policy implications of the empirical results have been proposed.     

Can carbon emission trading scheme achieve energy conservation and emission reduction? Evidence from the industrial sector in China

Whether the emission trading scheme (ETS) can achieve energy conservation and emission reduction in developing countries is crucial for these countries to achieve sustainable economic and environmental development. This study investigates the energy conservation and emission reduction effects of China's carbon dioxide (CO₂) ETS pilot policy implemented in 2011. Based on panel data of the two-digit industry at province level from 2005 to 2015, we adopt the difference-in-differences (DID) model to examine the effects of the CO₂ ETS on energy conservation and emission reduction. The results show that the CO₂ ETS decreases the energy consumption of the regulated industries in pilot areas by 22.8% and the CO₂ emissions by 15.5% compared to those in nonpilot areas. Further analysis indicates that the policy effects are mainly driven by improving technical efficiency and adjusting industrial structure. In addition, we find that the CO₂ ETS performs better in areas with high levels of environmental enforcement and marketization. Overall, our findings suggest that the CO₂ ETS has achieved energy conservation and emission reduction effects in developing countries.     

Investigating the driving factors of regional CO2 emissions in China using the IDA-PDA-MMI method

In this paper, we systematically summarized existing research on the driving factors of CO₂ emissions and found that changes in technology gap may be one of the key driving factors of CO₂ emissions. Technology efficiency, technology progress, and technology gap were decomposed by using the Meta-frontier Malmquist index (MMI), which was then combined it with the Index Decomposition Analysis (IDA) and the Production-theoretical Decomposition Analysis (PDA). Our framework was applied to Chinese provincial data from 2000 to 2016. We identified nine factors to explain changes of regional CO₂ emissions. Results demonstrate that economic scale, energy technology efficiency, and output technology efficiency increased CO₂ emissions in Eastern, Central, and Western regions of China, with the economic scale being the largest contributor. Energy structure, energy intensity, energy technology progress, and output technology progress decreased regional CO₂ emissions, with the energy technology progress playing the strongest role. Energy technology gap and output technology gap led to an increase in CO₂ emissions in Central China and, to a lesser extent, in Western China. The effects of each driving factor on CO₂ emissions varied across provinces. Finally, policy implications are suggested to reduce CO₂ emissions in China.     

Carbon dioxide,income and energy: Evidence from a non-linear model

This study applies the panel smooth transition regression (PSTR) model to explore the impacts of real income, energy, and investment on the CO₂-income nexus for 99 countries covering the period from 1971 to 2010. We find that in the full sample, as real income rises, CO₂ emissions rapidly increase first, and then their increasing rate starts to slow down, while the environmental Kuznets curve (EKC) hypothesis for CO₂ emissions is supported from the composite results of three income groups. Our results show that decreasing energy usage, improving energy efficiency, and enhancing clean energy usage could effectively ease the impacts of real income on CO₂ emissions. Moreover, countries with different energy trade conditions and income levels have different CO₂-income correlations, indicating that one size does not fit all.     

Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): Evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries

This paper addresses the impact of both economic growth and financial development on environmental degradation using a panel cointegration technique for the period between 1980 and 2007, except for Russia (1992-2007). In long-run equilibrium, CO₂ emissions appear to be energy consumption elastic and FDI inelastic, and the results seem to support the Environmental Kuznets Curve (EKC) hypothesis. The causality results indicate that there exists strong bidirectional causality between emissions and FDI and unidirectional strong causality running from output to FDI. The evidence seems to support the pollution haven and both the halo and scale effects. Therefore, in attracting FDI, developing countries should strictly examine the qualifications for foreign investment or to promote environmental protection through the coordinated know-how and technological transfer with foreign companies to avoid environmental damage. Additionally, there exists strong output-emissions and output-energy consumption bidirectional causality, while there is unidirectional strong causality running from energy consumption to emissions. Overall, the method of managing both energy demand and FDI and increasing both investment in the energy supply and energy efficiency to reduce CO₂ emissions and without compromising the country’s competitiveness can be adopted by energy-dependent BRIC countries.     

On the income–nuclear energy–CO2 emissions nexus revisited

This paper seeks to contribute to the debate over the income–nuclear enery–CO₂ emissions nexus by taking specific account of the possible endogeneity of income, which has been largely ignored by early studies. A multivariate cointegrated vector autoregression (CVAR) is applied to top six nuclear generating countries. We find that nuclear energy tends to reduce CO₂ emission for all countries. It is also found that income has a beneficial effect on the environment only in some countries. Finally, we find that CO₂ emissions and income are indeed determined simultaneously, while nuclear energy acts exogenously, indicating that nuclear energy is the driving variable, which significantly influences the long-run movements of CO₂ emissions and income, but is not affected by CO₂ emissions and income in the model.     

How does tax system on energy industries affect energy demand,CO2 emissions,and economy in China?

Energy savings and CO₂ emission reduction have become a major issue in recent years. Taxes on energy production sectors may be an effective way to save energy, reduce CO₂ emissions, and improve environmental quality. This paper constructs a dynamic recursive Computable General Equilibrium (CGE) model to analyze the impact of the energy tax on energy, economy, and environment from the perspective of tax rates and tax forms (specific tax and ad valorem tax). The results show that adjusting the tax system and the tax rate has important implications for energy conservation while having minor impacts on the output of other industries. The impact of an increasing energy tax on the energy demand is greater than the impact on sectoral output, indicating that energy efficiency will be increased to some extent. The CO₂ reduction will increase over time when an ad valorem tax is implemented on enterprises. We found that ad valorem tax has greater elasticity of economic output, energy demand, and CO₂ emission reduction. The results support the direction of China's resource tax reform. However, we argue that it is better to increase the tax rate relatively and relax the control on energy prices so that energy efficiency will increase.     

The effects of stock market growth and renewable energy use on CO2 emissions: Evidence from G20 countries

The primary objective of this study is to empirically examine the effect of stock market growth and foreign direct investment (FDI) inflows on CO₂ emissions. Further, this study investigates the impact of renewable energy consumption on CO₂ emissions and economic output in a panel of the G20 countries. The empirical analysis was carried out on the full sample as well as on sub-samples of developed and developing economies of the G20 member countries. The results confirm a significant long-run equilibrium relationship among the variables across the panels. Further, the long-run elasticities suggest that FDI significantly reduces CO₂ emissions in the full sample and developing economies while stock market growth reduces in developed economies. Similarly, the renewable energy consumption substantially reduces CO₂ emissions and increases economic output across the panels. Our findings have important policy implications. For instance, the policy makers have to initiate effective policies to promote the renewable energy sources to meet the increasing demand for energy by replacing the use of conventional energy such as coal, gas and oil. This will therefore help to reduce the CO₂ emissions and also ensure sustainable economic development in the G20 nations.     

Environmental Kuznets Curve hypothesis in Pakistan: Cointegration and Granger causality

The paper is an effort to fill the gap in the energy literature with a comprehensive country study of Pakistan. We investigate the relationship between CO₂ emissions, energy consumption, economic growth and trade openness in Pakistan over the period of 1971–2009. Bounds test for cointegration and Granger causality approach are employed for the empirical analysis. The result suggests that there exists a long-run relationship among the variables and the Environmental Kuznets Curve (EKC) hypothesis is supported. The significant existence of EKC shows the country's effort to condense CO₂ emissions and indicates certain achievement of controlling environmental degradation in Pakistan. Furthermore, we find a one-way causal relationship running from economic growth to CO₂ emissions. Energy consumption increases CO₂ emissions both in the short and long runs. Trade openness reduces CO₂ emissions in the long run but it is insignificant in the short run. In addition, the change of CO₂ emissions from short run to the long span of time is corrected by about 10% yearly.     

Coordinating technological progress and environmental regulation in CO2 mitigation: The optimal levels for OECD countries & emerging economies

As technological progress and environmental regulation are not only important drivers of but also the double-edged swords in mitigation of CO₂ emissions, it is important to figure out their optimal threshold values for CO₂ emissions' reduction. This paper employs the panel smooth transition regression technique to explore these optimal values in the case of OECD countries and emerging economies. The results show that: (1) OECD countries are at a level of excessive technological progress, which will have a rebound effect and increase CO₂ emissions. (2) Emerging economies are under a strict level of environmental regulation, which will lead to serious ‘green paradox’ effects and harm the economic development. Moreover, they have great potential to achieve CO₂ emissions reduction targets through technological progress. (3) Due to the rebound effect, the concentration of environment-related technologies should be shifted from improving energy efficiency to reducing carbon emissions directly such as capture, storage, sequestration or disposal of greenhouse gases. (4) OECD countries should provide low-carbon technical support to emerging economies. In addition, because of the existence of heterogeneity, OECD countries ought to determine their levels of technological progress and environmental regulation according to their own actual conditions.     

Promotion of energy conservation in developing countries through the combination of ESCO and CDM: A case study of introducing distributed energy resources into Chinese urban areas

The implementation of an energy service company (ESCO) project in developing countries may result not only in reduced energy cost but also in considerable environmental benefits, including the reduction of CO₂ emissions, which can be assessed in an economic manner under the Clean Development Mechanism (CDM) scheme. In this way, the economic and environmental benefits of energy conservation activities can be enjoyed by both the investor and the end-user, which can reduce the investment risk and realize a rational profit allocation. This study presents a numerical analysis of the introduction of distributed energy resources (DER) into a Chinese urban area. An optimization model is developed to determine the energy system combination under the constraints on the electrical and thermal balances and equipment availability. According to the simulation results, the introduction of DER systems possesses considerable potential to reduce CO₂ emissions, especially when considering that the economic profit of the CO₂ credit will increase the incentive to adopt DER systems to an even greater extent. Furthermore, by sharing the energy cost savings with the investors under an ESCO framework, the investment risk can be further reduced, and the conditions required for the project to qualify for CDM can be relaxed.     

CO2 emissions,energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models

This paper examines the nexus between CO₂ emissions, energy consumption and economic growth using simultaneous-equations models with panel data of 14 MENA countries over the period 1990–2011. Our empirical results show that there exists a bidirectional causal relationship between energy consumption and economic growth. However, the results support the occurrence of unidirectional causality from energy consumption to CO₂ emissions without any feedback effects, and there exists a bidirectional causal relationship between economic growth and CO₂ emissions for the region as a whole. The study suggests that environmental and energy policies should recognize the differences in the nexus between energy consumption and economic growth in order to maintain sustainable economic growth in the MENA region.     

Quantifying regional economic impacts of CO2 intensity targets in China

To address rising energy use and CO₂ emissions, China's leadership has enacted energy and CO₂ intensity targets under the Twelfth Five-Year Plan (2011–2015), which are defined at both the national and provincial levels. We develop a computable general equilibrium (CGE) model with global coverage that disaggregates China's 30 provinces and includes energy system detail, and apply it to assess the impact of the current binding provincial CO₂ emissions intensity targets. We compare the impact of the provincial targets approach to a single target for China that achieves the same reduction in CO₂ emissions intensity at the national level. The national target assumes trading of emissions allowances across provinces, resulting in the least-cost reductions nationwide. We find that the national target results in about 20% lower welfare loss in China relative to the provincial targets approach. Given that the regional distribution of impacts has been an important consideration in the target-setting process, we focus on the changes in provincial-level CO₂ emissions intensity, CO₂ emissions, energy consumption, and economic welfare. We observe significant heterogeneity across provinces in terms of the energy system response as well as the magnitude of welfare impacts. We further model the current policy of fixed end-use electricity prices in China and find that national welfare losses increase. Assumptions about capital mobility have a substantial impact on national welfare loss, while changing assumptions about the future availability of domestic natural gas resources does not have a large effect.     

Trade openness–carbon emissions nexus: The importance of turning points of trade openness for country panels

This paper explores the relationship between trade openness and CO₂ emissions by incorporating economic growth as an additional and potential determinant of this relationship for three groups of 105 high, middle and low income countries. We apply the Pedroni (1999) and Westerlund (2007) panel cointegration tests and find that the three variables are cointegrated in the long run. Trade openness impedes environmental quality for the global, high income, middle and low income panels but the impact varies in these diverse groups of countries. The panel VECM causality results highlight a feedback effect between trade openness and carbon emissions at the global level and the middle income countries but trade openness Granger causes CO₂ emissions for the high income and low income countries. Policy implications are also provided.     

Economic growth,energy conservation and emissions reduction: A comparative analysis based on panel data for 8 Asian-Pacific countries

This study was conducted to evaluate the causality between energy consumption, GDP growth and carbon emissions for eight Asia-Pacific countries from 1971 to 2005 using the panel data. The results indicate that there are long-run equilibrium relationships between these variables. Additionally, causality from energy consumption to CO₂ emissions was observed generally, but there were some opposite relationships also. Parameter estimations of the panel data model indicate that there are great differences in the carbon emissions, the efficiencies of energy use, carbon emissions of unit GDP and unit energy consumption between developed and developing countries. The base carbon emissions, per capita energy consumption and efficiency of energy use in developing countries are far lower than in developed countries; however, the CO₂ emissions per unit of energy use is higher. Although developing countries may reduce their CO₂ emission per unit energy use, total energy consumption will rise rapidly with economic development. Thus, developing countries must determine how to undergo economic growth while conserving energy and reducing emissions. To respond to global climate change, it is necessary to develop innovative technology for energy use, transform the energy structure and conduct the clean development mechanism.     

Estimating the potential for electricity savings in households

Improving efficiency in the use of energy is an important goal for many nations since end-use energy efficiency can help to reduce CO₂ emissions. Furthermore, since the residential sector in industrialised countries requires around one third of the end-use electricity, it is important for policy makers to estimate the scope for electricity saving in households to reduce electricity consumption by using appropriate steering mechanisms. We estimate the level of technical efficiency in the use of electricity using data from a Swiss household survey. We find an average inefficiency in electricity use by Swiss households of around 20 to 25%. Bottom-up economic-engineering models estimate the potential in Switzerland to be around 15%. In this paper we use a sub-vector input distance frontier function based on economic foundations. Our estimates lie at the upper end of the electricity saving potential estimated by the afore-mentioned economic-engineering approach.     

Economy and CO2 emissions trade-off: A systematic approach for optimizing investments in process integration measures under uncertainty

In this paper we present a systematic approach for taking into account the resulting CO₂ emissions reductions from investments in process integration measures in industry when optimizing those investments under economic uncertainty. The fact that many of the uncertainties affecting investment decisions are related to future CO₂ emissions targets and policies implies that a method for optimizing not only economic criteria, but also greenhouse gas reductions, will provide better information to base the decisions on, and possibly also result in a more robust solution. In the proposed approach we apply a model for optimization of decisions on energy efficiency investments under uncertainty and regard the decision problem as a multiobjective programming problem. The method is applied to a case of energy efficiency investments at a chemical pulp mill. The case study is used to illustrate that the proposed method provides a good framework for decision-making about energy efficiency measures when considerations regarding greenhouse gas reductions influence the decisions. We show that by setting up the problem as a multiobjective programming model and at the same time incorporating uncertainties, the trade-off between economic and environmental criteria is clearly illustrated.     

What proportion of renewable energy supplies is needed to initially mitigate CO2 emissions in OECD member countries?

In spite of increasing numbers of countries having established renewable energy development mechanisms for carbon dioxide (CO₂) emissions reduction, the CO₂ emissions problem continues to worsen along with the growth of the world economy. This leads us to examine the threshold effect of the proportion of renewable energy supply for CO₂ emissions reduction by means of the panel threshold regression model (PTR). Economic growth and the price of energy are also both taken into account in the model in measuring the specific influence that each of them has on CO₂ emissions. The empirical panel data encompass all 30 member countries of the OECD and cover a period of about a decade in length from 1996 to 2005. Our empirical results provide clear evidence of the existence of a single threshold effect that may be divided into lower and higher regimes. Based on the specific estimates of the slope coefficients in each regime distinguished, we find that a renewable energy supply accounting for at least 8.3889% of total energy supply would mean that CO₂ emissions would start to be mitigated. Furthermore, real GDP and the CPI of energy are significantly and positively and insignificantly and negatively correlated with CO₂ emissions, respectively. These findings lead us to conclude that the authorities ought to enhance the proportion of renewable energy supply to more than 8.3889% of all energy supplied, which might help resolve the dilemma between economic growth and CO₂ emissions. Realizing the effects of CO₂ emissions reduction via energy price reforms or the levying of a carbon tax levy may, however, still remain a puzzle.     

Adoption of carbon dioxide efficient technologies and practices: An analysis of sector-specific convergence trends among 12 nations

Carbon dioxide intensities in economic terms (GDP in PPP terms) in industrialized and developing countries have been shown to converge, and it has been argued that technology diffusion, leading to the use of similar technologies in all countries, is an important reason for this convergence. Indicators based on CO₂ per output in PPP terms, however, give in comparison to physical indicators limited understanding of the process of technology diffusion. In order to analyze the technology diffusion hypothesis in more detail, we therefore study the trend in carbon dioxide emissions in relation to the production output in four separate sectors: iron and steel; paper, board and pulp; coal fuelled power plants; and natural gas fuelled power plants, in each of 12 countries, between 1980 and 1998. The indicators converge in each sector, indicating that across countries, technologies with more similar carbon dioxide efficiencies are used today than 25 years ago. We also find that at least some developing countries with high energy prices use more efficient technologies than industrialized countries with low energy prices.