Can innovation shocks determine CO2 emissions (CO2e) in the OECD economies? A new perspective

ABSTRACT

This study has attempted to address prior knowledge gaps in the environmental economics literature by integrating the innovation shocks into the Environment Kuznets Curve (EKC) equation for twenty-six OECD economies using data from 1990 to 2014. Foreign direct investment (FDI), exports (EXP), renewable energy consumption (REC), and GDP per capita were included as control variables. The results from multiple empirical analyses indicated that positive shocks to innovation improve, but the negative shocks disrupt environmental quality. Data analyses also showed that a positive correlation exists between income per capita of OECD economies. From the negative coefficient of income per capita (squared) and the existence of a negative nexus between FDI and CO2e, both the EKC and the Pollution Halo Hypothesis (PHH) were confirmed in sampled economies, respectively. The paper offers empirical support for the favourable impacts of REC on the quality of the environment and calls for the adoption of innovation shocks as a policy instrument to formulate better environmental policies for a sustainable future.     

区域碳排放强度变化的因素分解模型及实证分析——以江苏省为例

文章通过分解模型从横向和纵向两个方面分析影响碳排放强度变化的因素.研究表明,江苏省碳排放强度变动由行业碳排放强度和行业产出份额共同作用.相对于行业产出份额,行业碳排放强度对整个社会碳排放强度变动影响更大.而工业行业对整个社会碳排放强度贡献较大,工业部门内部结构变化对碳排放强度变化有较大影响.因此,江苏省碳排放强度研究应该重点放在行业碳排放强度的变化,尤其是研究工业行业碳排放强度的变化上以及工业结构的调整上.     

Empirical study on the determinants of CO2 emissions: evidence from OECD countries

This article empirically investigates the Environmental Kuznets Curve (EKC) for CO₂ emissions in the cases of 11 OECD countries by taking into account the role of nuclear energy in electricity production. The autoregressive distributed lag approach to cointegration is employed as the estimation method. Our results indicate that energy consumption has a positive impact on CO₂ emissions in most countries in the study. However, the impact of trade is not statistically significant. The results provide evidence for the role of nuclear power in reducing CO₂ emissions only in some countries. Additionally, although the estimated long-run coefficients of income and its square satisfy the EKC hypothesis in Finland, Japan, Korea and Spain, only Finland's EKC turning point is inside the sample period of the study, providing poor evidence in support of the EKC hypothesis.     

Time-varying correlations in oil,gas and CO2 prices: an application using BEKK,CCC and DCC-MGARCH models

Previous literature has identified oil and gas prices as being the main drivers of CO₂ prices in a univariate Generalized Autoregressive Conditional Heteroscedasticity (GARCH) econometric framework (Alberola et al., 2008; Oberndorfer, 2009). By contrast, we argue in this article that the interrelationships between energy and emissions markets shall be modelled in a Vector Autoregressive (VAR) and Multivariate GARCH (MGARCH) framework, so as to reflect the dynamics of the correlations between the oil, gas and CO₂ variables overtime. Using the Baba–Engle–Kraft–Kroner (BEKK), Constant Conditional Correlation (CCC) and Dynamic Conditional Correlation MGARCH (DCC-MGARCH) models on daily data from April 2005 to December 2008, we highlight significant own-volatility, cross-volatility spillovers, and own persistent volatility effects for nearly all markets, indicating the presence of strong Autoregressive Conditional Heteroscedasticity (ARCH) and GARCH effects. Besides, we provide strong empirical evidence of time-varying correlations in the range of [?0.3;?0.3] between oil and gas, [?0.05;?0.05] between oil and CO₂, and [?0.2;?0.2] between gas and CO₂, that have not been considered by previous studies. These findings are of interest for traders and utilities in the energy sector, but also for a broader applied economics audience.     

Determinants of the global and regional CO2 emissions: What causes what and where?

Using the Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model and an unbalanced panel dataset of 128 countries covering 1990–2014, this study aims to examine the key impact factors (KIFs) of the global and regional carbon dioxide (CO₂) emissions and analyse the effectiveness of non-renewable and renewable energies. Given the potential cross-sectional dependence and slope heterogeneity, a series of econometric techniques allowing for cross-sectional dependence and slope heterogeneity is applied. The overall estimations imply that the KIFs at the global level are economic growth, followed by population size, non-renewable energy, and energy intensity in order of their impacts on CO₂ emissions; conversely, the KIFs at the regional level vary across different regions and estimators. The results also suggest that renewable energy can lead to a decline in CO₂ emissions at the global level. At the regional level, only for two regions (i.e., S. & Cent. America and Europe & Eurasia) renewable energy has a significant and negative effect on CO₂ emissions, which may be affected by the share of renewable energy consumption in the primary energy mix. Finally, the results indicate varied causality relationships among the variables across regions.

Abbreviations: AMG: Augmented mean group; BP: British Petroleum; BRICS: Brazil, Russia, India, China, and South Africa; CCEMG: Common correlated effects mean group; CD: Cross-section dependence; CIPS: Cross-sectionally augmented Im, Pesaran, and Shin; CO₂: Carbon dioxide; PS: Population size; D-H: Dumitrescu-Hurlin; EI: Energy intensity; EU: European Union; EU-5: Germany, France, Italy, Spain, and the United Kingdom; Europe & Eurasia, Europe and Eurasia; GDP: Gross domestic product; IEA: International Energy Agency; KIF: Key impact factor; LM: Lagrange multiplier; Mtoe, Million tonnes oil equivalent; NRE: Non-renewable energy; RE: Renewable energy; S. & Cent. America, South and Central America; STIRPAT: Stochastic Impacts by Regression on Population, Affluence, and Technology; VECM: Vector error correction model; WDI: World Development Indicators     

The Ethics of Emissions Trading

This article defends three ethical arguments against emissions trading. The first argument alleges that emissions trading is morally objectionable, because it ‘commodifies’ the atmosphere. The second argument involves various objections to attaching prices to units of emissions – loosely speaking, the objection is to pricing that which is priceless or should not be priced. The third argument turns on the idea that if a large cut in emissions is to be made by society overall, everyone should ‘do their bit’ by making a particular kind of sacrifice rather than paying others to do it instead. Some general conclusions concern the limitations of confining the analysis to idealised emissions trading, the difficulty in separating ‘economistic’ thinking about policy delivery from policy choice and the need to focus questions of justice on consumers rather than on producers.     

Environmental Policy,Sustainable Development,Governance Mechanisms and Environmental Performance

We investigate the effects of environmental policy (Climate Change Act – CCA), sustainable development frameworks (Global Reporting Initiative – GRI; UN Global Compact – UNGC) and corporate governance (CG) mechanisms on environmental performance (carbon reduction initiatives – CRIs; actual carbon performance – GHG emissions) of UK listed firms. We use the generalized method of moments (GMM) estimation technique to analyse data consisting of 2245 UK firm‐year observations over the 2002–2014 period. First, we find that the CCA has a positive effect on CRIs, and this effect is stronger in better‐governed firms. Second, we find that the GRI‐based framework is positively associated with CRIs. Third, we find that firms with poor CG structures have lower actual carbon performance compared with their better‐governed counterparts. Overall, our evidence suggests that firms can symbolically conform to environmental policy (CCA) and sustainable development frameworks (GRI, UNGC) by engaging in CRIs without necessarily improving actual environmental performance (GHG emissions) substantively. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Factors driving embodied carbon in international trade: a multiregional input–output gravity model

ABSTRACT

Concerns about the effects and consequences of climate change have notably increased in recent decades. Despite large advances in the understanding of this phenomenon, further research into the determinants of gas emissions is necessary, to shed light on the responsibilities of producers and consumers, and their potential contribution to mitigation strategies. This paper studies the trajectories and determinants of carbon embodied in world trade during a period of 15 years. Our methodology relies on a multiregional input–output model, environmentally extended. Drawing on data from the World Input–Output Database, we estimate embodied emissions in bilateral flows. Then, we assess the determinants of CO₂ emissions embodied in trade, combining input–output modelling with trade gravity panel data analysis. This paper offers a methodological approach that explains and quantifies the underlying factors of carbon trade, integrating the production and consumption perspectives and considering the geographical, structural and institutional context of countries.     

On inferring individual behaviour from market behaviour in a predetermined quantities model

This article develops the theoretical basis of individual behaviour recovered from market behaviour in a predetermined quantities model. As applied economists argue, an inverse demand system may be empirically sound within the framework of classical demand theory. However, it should not lead to the conclusion that the market responses for changes in quantity should be used to see welfare effects instead of the individual responses by price changes as far as the market is concerned. It shows theoretically and empirically how individual responses can be recovered from market responses in a predetermined quantities model. It suggests that the fundamental results of this article should be used on interpreting empirical results from the predetermined quantities models.     

Environmental Product Differentiation and Environmental Awareness

In this paper, we have considered a duopolistic model of environmental product differentiation with two types of consumers (green and brown) to analyze how environmental awareness affects the environment. “Green” consumers value the physical and environmental attributes of the good they purchase while “brown” consumers only value the physical attributes. We find that more environmental awareness may not be good news for the environment as the firm that produces the good without environmental attributes may increase its sales. The result depends on the degree of product differentiation and the cost to achieve it. Social welfare can also be inversely related to environmental awareness if the negative environmental effect dominates the positive market effect.