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Drivers of decoupling economic growth from carbon emission – an empirical analysis of 192 countries using decoupling model and decomposition method

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Abstract

All countries are committed to tackle global warming whatever the economic development level. However, governments are hesitant to take aggressive actions to cut carbon emissions without breakthroughs in decoupling economic growth from carbon emissions if they have to pay the economic loss price. Thus developing and implementing more aggressive and efficient Intended Nationally Determined Contributions (INDCs) of the Paris Agreement requires a better understanding of the possibility to decouple carbon emissions from economic growth. This study explores global and regional decoupling trends and further investigates the decoupling effects using the upgraded data. The results demonstrate that decoupling states of developed countries mostly converged on stable weak decoupling and switching to the strong decoupling status. Most developing countries did not show a clear decoupling state. Affluence level was the key offsetting effect of decoupling process, while energy intensity was the most significant effect to promote the decoupling process. Also, declines of energy intensity drove developed countries to strong decoupling state. Nonetheless, economic growth level dominated the decoupling process in developing countries, by contrast, there was no significant decreasing trend of energy intensity in these countries. These findings have feasible policy implications for implementing the INDCs.

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... As the world's largest developing country, China's carbon emission reduction work plays a crucial role in improving the grim situation of global climate change. In the past decade, China has formulated a series of policy measures to try to realize the decoupling of economic growth and carbon emissions [2]. Although it has achieved some results, it still faces severe challenges. ...
... For example, Huang et al. [13] proposed a nonlinear multivariate gray prediction model based on EKC in view of the realistic characteristics of incomplete statistics of carbon emissions data of the transportation sector, considering factors such as economy, population and energy. (2) The relationship between transportation carbon emissions and economic growth was discussed with the help of decoupling models, including the Tapio decoupling model, Kaya identity and log-mean variance index (LMDI) decomposition model. Jiang et al. [14] combined the decomposition technology with decoupling analysis and decomposed the traffic decoupling index into five different aspects to analyze the key driving factors of the decoupling of CO 2 emissions related to different transportation modes and transportation turnover. ...
... Economic development is represented by the GDP of a city. At the same time, in order to provide the accuracy of the estimation results, four control variables are selected into model (1) and model (2) as follows: ...
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... Some academics have proposed the decoupling paradigm, which states the need to separate economic growth from increasing energy demand [55]. However, this approach has been shown to be more relevant and applicable to cases of developed economies, where energy efficiency and decarbonisation measures are much more advanced than in developing countries [56]. Research into energy planning and demand modelling for developing countries has continued to recognise the reliability of socio-economic ...
... Some academics have proposed the decoupling paradigm, which states the need to separate economic growth from increasing energy demand [55]. However, this approach has been shown to be more relevant and applicable to cases of developed economies, where energy efficiency and decarbonisation measures are much more advanced than in developing countries [56]. Research into energy planning and demand modelling for developing countries has continued to recognise the reliability of socio-economic indicators as an indicator of energy demand [14,56]. ...
... However, this approach has been shown to be more relevant and applicable to cases of developed economies, where energy efficiency and decarbonisation measures are much more advanced than in developing countries [56]. Research into energy planning and demand modelling for developing countries has continued to recognise the reliability of socio-economic indicators as an indicator of energy demand [14,56]. Consequently, this study assumes a relationship between energy demand and socio-economic development. ...
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... There is ample literature on decoupling growth from emissions CO2. This topic sparks growing interest from scientists because of the increasing global warming mostly caused by CO2 emissions which threaten the global climate and considerably affect both the environment and human health (Wang and Su, 2020;Li and Jiang 2017;Thalassinos et al., 2022). ...
... Other factors showed little impact on the decoupling of CO2 emissions. Wang et al. (2020) constructed a decoupling effort index for the Chinese iron and steel industry. ...
... " this study compares the decoupling progress in East China with that of developed countries and offers policy recommendations for replication in less economically developed regions. The United States exhibited a relatively stable decoupling status between 2000 and 2014, followed by significant decoupling 50,51 . In 2006, China overtook the US to take the top spot for carbon dioxide emissions worldwide. ...
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... This cycle is further exacerbated by changes in industrial structure, urbanization, and economic growth, which also contribute to increased GHG emissions. Technological progress and environmental constraints both present new possibilities and requirements for energy intensity [35]. Based on the various effects summarized from existing research, Figure 1 illustrates the underlying mechanisms of the relationships among these driving factors and their connections to GHG emissions. ...
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... These types of cities often rely on mineral resource extraction and processing industries with high carbon emissions, so their economic models are significantly characterized by extensive development paths of high input, high energy consumption, high emissions, and low efficiency, which have gradually become an important factor restricting China from achieving comprehensive carbon peak [3,4]. Therefore, the in-depth exploration of how MR-BCs can achieve decoupling between carbon dioxide emissions and economic growth has become a focus of attention for both academia and policymakers [5,6]. By using the EWM-TOPSIS model (EWM: Entropy weight method; TOPSIS: Technique for Order Preference by Similarity to Ideal Solution) to quantify the economic indices of 18 MRBCs in southwest Sustainability 2024, 16, 10081 3 of 23 but without clear representativeness. ...
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... In addition, many scholars explored the influencing factors of carbon emission decoupling by using the log-mean score difference index method and the production-theoretical decomposition analysis method. It is proposed that energy intensity, affluence, and population size are among the influencing factors of carbon emission decoupling [28,[52][53][54]. Some scholars have also used the geographically weighted regression model to discuss the effects of resident income, population size, and secondary industry scale on the coupling coordination degree between carbon emission and economic development [55]. ...
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... Scholars like Qi [5] and Xin et al. [6] utilized the EIO-LCA model to investigate CO 2 emission influencing factors, highlighting the role of import/export and inflow/outflow structures in emission reduction. The LMDI (Logarithmic Mean Divisia Index) decomposition model, Tapio decomposition model, and distorted Kaya identity are commonly employed to analyze driving factors affecting carbon emissions, suggesting that energy consumption intensity and structure inhibit carbon emissions, while energy and industrial structure and economic growth promote them [7][8][9][10]. Tong et al. [11] established a VAR model to study the driving role of influencing factors on carbon emissions in different industrialization stages across 34 countries, offering insights for China's current low-carbon development phase. ...
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... Common methods for estimating carbon emissions impact include the SBM model [33][34][35], regression models [36,37], and the Tapio decoupling model [38,39]. Regression models require high-quality data, while the SBM model focuses on resource allocation at a point in time, making it less effective for capturing the evolving relationship over time. ...
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... Wang and Su investigated the relationship between economic growth and carbon emissions in 192 countries and found that there was a clear decoupling state in developing countries, but the decoupling state in developed countries was mainly concentrated in a stable weak decoupling state that transitioned to a strong decoupling state. Among these, energy intensity had the most evidently positive effect on the decoupling process [18]. In their analysis of the relationships between the energy economies of major global regions and nations, Guo et al. also looked into the possibility of decoupling and discovered that, while energy use and economic growth have been rising simultaneously in developing economies, they show a typical inverted U-shaped decoupling relationship in industrialized nations [19]. ...
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... [2,3] As a result of these restrictions, human activity has been severely limited, which has had a negative effect on economy and businesses on a global and national scale. [4][5][6] Apparently, the viable and impactful option for reducing COVID-19 from having a tragic effect on the globe was through a global lockdown. Wuhan City in China was the place of the first diagnosis of this deadly infectious disease on the 29 th of December 2019. ...
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... Using this method, researchers have turned the factors that affect changes in carbon emissions into a number of different markers that can be used for different types of research. They have also conducted studies on a world scale [24], regional [25], national [26], city [27] and industrial [28] scales. ...
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The Hu-Bao-O-Yu urban area is a major source of carbon emissions in China. It is also a major source of energy exports and high-end chemicals in China. Reaching peak carbon emissions early is especially important for meeting the national peak goal. For urban areas that rely on natural resources, we need to make it clearer how carbon emissions and economic growth affect each other and slowly break the strong link between the two. Therefore, in this paper, based on the data on carbon emissions, the decoupling state and the driving mechanism of carbon emissions in the Hu-Bao-O-Yu City group are researched by using the Tapio decoupling model and GDIM method. A new decoupling index model is constructed by combining GDIM and the traditional decoupling model. The main findings are as follows: (1) The Hu-Bao-O-Yu urban agglomeration, Ordos City, Baotou City and Yulin City have significant growth trends in annual carbon emissions, with Yulin City being the most important carbon source for the Hu-Bao-O-Yu urban agglomeration and its economic contribution to carbon emissions of the whole urban agglomeration is the most efficient. (2) The decoupling of Hu-Bao-O-Yu, Huhhot City, Baotou City, and Ordos City is dominated by expansionary negative decoupling, whereas Yulin City has strong negative decoupling. (3) The Hu-Bao-O-Yu urban cluster mainly affects the carbon intensity of fixed asset investments and output carbon intensity, which is a key part of the carbon separation process. The energy scale and structure also play a part in this process over time. (4) Changes in GDP per capita are a bigger part of changes in carbon emissions in the Hu-Bao-O-Yu urban agglomeration. These changes also determine the direction for changes in carbon emissions in the Hu-Bao-O-Yu urban agglomeration. In the future, the Hu-Bao-O-Yu urban agglomeration needs to coordinate its economic growth. Ordos and Yulin need to speed up the optimisation and transformation of their energy structures. Baotou needs to push for the low-carbon transformation of its industries. Huhhot needs to do more research on carbon sequestration technology and spend more on environmental protection. This will make the Hu-Bao-O-Yu urban agglomeration a resource-saving urban agglomeration and improve its ability to reduce emissions.
... Currently, clean and renewable energy is getting a lot of consideration. It is considered one of the most effective ways to decrease CE and reach a low-carbon development [218,219]. Le Qu et al. [220] recently asserted that substituting renewable energy for fossil fuel consumption would reduce carbon emissions. Several studies [221,222] have deliberated on openings and challenges associated with the transition toward a greener future. ...
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Climate change has become a global nightmare, and the awareness of the causes of carbon emissions have resulted in rigorous studies. These studies linked the increase in global warming with booming economic growth. Since global warming has become more apparent, researchers have explored ways to decouple economic activities from carbon growth. Economic and carbon growth must be decoupled to achieve a low-carbon economy to support the carbon growth plan or emission reduction strategy. The world is transitioning towards a carbon-neutral and green ecosystem, so finding ways to decouple carbon emissions from economic activities is an exciting topic to explore. The study reviews current information on the importance of decoupling energy from economic growth innovative techniques that thoroughly examine the challenges and constraints of low-carbon energy systems. This review revealed that decarbonization and dematerialization had been achieved without declining global economic growth. It also provides information on energy use and economic activities leading to global carbon emissions and alternative solutions to the global challenge of climate change. The decoupling methods commonly used to determine the impact of energy decarbonization on economic growth are explored. All suggested that economic growth is a primary mover of global carbon emission increase and must be separated to achieve a carbon environment.
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... Regions that were more proactive in adopting new technologies and enforcing strict environmental regulations showed more favorable decoupling states by the end of the study period. This is consistent with the previous work which found that technological innovation and stringent environmental policies are pivotal in decoupling economic growth from environmental degradation [54]. As Xinjiang continues to develop, maintaining a focus on regional specificities will be essential for crafting policies that not only promote economic growth but also safeguard environmental integrity. ...
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Understanding the spatiotemporal decoupling effects among economic development, energy consumption, and carbon dioxide emissions is paramount to achieving sustainable development. This relationship sheds light on how regions can grow economically while managing their energy resources efficiently and minimizing environmental impacts. This study examines the critical and globally relevant issue of spatiotemporal decoupling that includes economic development, energy consumption, and carbon dioxide emissions in Xinjiang Province from 2006 to 2020. The Tapio Elasticity Analysis Method is utilized to achieve this objective. We found that the early years showed expansive coupling, reflecting a phase where economic growth was closely tied to increases in energy consumption and emissions. However, over time, particularly post-2010, there is a noticeable shift towards weak decoupling and eventually to more substantial forms of decoupling. The primary sector displayed mostly weak and strong decoupling. The secondary sector, however, showed fluctuating decoupling states. In the tertiary sector, a generally weak decoupling was observed. A spatial analysis across Xinjiang’s prefectures and cities revealed pronounced regional variations. This investigation validates the effectiveness of regional ecological policies and illustrates the necessity of tailored strategies to foster sustainable development. Our findings provide valuable insights not only for regional policymakers but also for international stakeholders aiming to achieve sustainable development. The results underline the importance of tailored strategies in different regions, contributing to the broader understanding of sustainable development dynamics.
... Decoupling analysis between economic growth and carbon emissions has been extensively conducted by scholars at various levels. Global-level studies by Shuai et al. (2019) and Wang and Su (2020) are complemented by regional examinations, such as those on ASEAN countries , OECD countries (Chen et al., 2018), and the European Union (Madaleno & Moutinho, 2018). At the national level, studies on specific countries like Colombia (Román-Collado & Cansino, 2018), Australia (Leal et al., 2019), Turkey (Ozdemir, 2023), and China (Pan et al., 2022;Wang et al., 2018a) provide valuable insights. ...
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... In addition, the Chinese government also emphasizes that the regions with more severe carbon peaking situations should also strive to be peaking carbon emissions at the same time as the whole country. In fact, for the same scale of embodied carbon outflows, the stress on regions with severe peaking situations will be much greater than that on the regions with moderate peaking situations [19,20]. Therefore, in the context of all regions seeking their own carbon peak, different peaking situations will inevitably lead to different peaking stress, which requires a differentiated focus on the embodied carbon flows caused by domestic trade and a targeted mitigation strategy. ...
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... In terms of the subject, some scholars have highlighted this topic with a certain country [13][14][15][16], or a certain region [17][18][19]. From the perspective of methodology, Tapio decoupled elasticity coefficient theory quantitatively analyses the situation where the pollution emissions growth rate changes as the economic growth rate changes, utilizing the decoupling factors proposed by the Organization for Economic Co-operation and Development (OECD) [20,21]. Meanwhile, index decomposition analysis (IDA), structural decomposition analysis (SDA), and production-theory decomposition analysis (PDA) are the main decomposition techniques for carbon emission components. ...
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... This sentiment is reinforced by long-standing theories of economic and environmental "de-coupling," where affluent economies supposedly move towards cleaner forms of development decoupled from environmentally intensive industrialization (Mol and Spaargaren 2000;Mol 2002;Buttel 2000). This logic is still prominent today, especially in relation to carbon emissions, the impact of growth in rich nations, or the continued allure of green capitalism (Rathi 2024;Wang and Su 2020;Krugman 2023). ...
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The carbon dioxide (CO2) emissions caused by the global construction industry account for 36% of the world’s total carbon emissions, and 50% of China’s total carbon emissions. The carbon emissions from Jiangsu Province’s construction industry account for approximately 16% of the total emissions of the Chinese construction industry. Taking the construction industry in Jiangsu Province as our study object, therefore, this paper introduces the Intergovernmental Panel on Climate Change (IPCC) carbon emission accounting method as a means to measure the total CO2 emissions of the Jiangsu Province construction industry. Specifically, we examine the period from 2005 to 2013. Based on the Tapio decoupling model, we analyze the decoupling state between the CO2 emissions of the construction industry in Jiangsu Province and the province’s economic growth. Our paper also employs the Logarithmic Mean Divisia Index (LMDI) approach, in order to conduct a decomposition analysis of those factors that influenced the changes in the level of CO2 emissions during the studied period. According to the results of our research, during the period from 2005 to 2013, the CO2 emission levels caused by the construction industry in Jiangsu Province experienced a significant increase. The cumulative total CO2 emissions reached 402.85 million tons. During most of the years covered by our study, an expansive negative decoupling state existed between the level of CO2 emissions and the output value of Jiangsu’s construction industry. These periods were interspersed with either a weak decoupling state in some years or a strong decoupling state in other years. The indirect carbon emission intensity effect and the industry scale effect were the main factors influencing the increases in the construction industry’s CO2 emissions. At the conclusion of our paper, we put forward policy suggestions, with the objective of promoting the de-carbonization of the construction industry in Jiangsu Province.
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Purpose Non-fossil fuels are receiving increasing attention within the context of addressing global climate challenges. Based on a review of non-fossil fuel consumption in major countries worldwide from 1985 to 2015, the purpose of this paper is to analyze trends for global non-fossil fuel consumption, share of fuel consumption and inequality. Design/methodology/approach The similarities were obtained between the logarithmic mean divisia index and the mean-rate-of-change index decomposition analysis methods, and a method was proposed for complete decomposition of the incremental Gini coefficient. Findings Empirical analysis showed that: global non-fossil fuel consumption accounts for a small share of the total energy consumption, but presents an increasing trend; the level of global non-fossil fuel consumption inequality is high but has gradually declined, which is mainly attributed to the concentration effect; inequality in global non-fossil fuel consumption is mainly due to the difference between nuclear power and hydropower consumption, but the contributions of nuclear power and hydropower to per capita non-fossil fuel consumption are declining; and population has the greatest influence on global non-fossil fuel consumption during the sampling period. Originality/value The main contribution of this study is its analysis of global non-fossil fuel consumption trends, disparities and driving factors. In addition, a general formula for complete index decomposition is proposed and the incremental Gini coefficient is wholly decomposed.
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The experiences of peak carbon emissions in developed economies can provide a significant reference for other economies. In terms of peak carbon intensity, per capita carbon emissions and carbon emissions, the peak process in developed economies is divided into three stages. This study analyzes gross domestic product (GDP), per capita GDP, industrialization rate, urbanization rate, and other indicators in each stage. The impacts of urbanization and industrialization on carbon emissions are examined by using a threshold regression model. The results indicate that urbanization and income level have a significant double-threshold effect on carbon emissions. From the perspective of urbanization, there is no significant correlation between carbon emissions and urbanization in the low-urbanization stage. However, urbanization has a negative effect on carbon emissions in the mid-urbanization stage. Then, this inhibitory effect becomes a promotional effect when the urbanization level crosses the second threshold. From the perspective of income level, industrialization contributes to the growth of carbon emissions. The promotional effect of industrialization on carbon emissions gradually increases in the low and intermediate income levels. However, this promotional effect begins to weaken in the high income level. Our study not only extends the existing literature about peak carbon emissions, but also merits particular attention for policy makers in less developed economies.
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With the growing attention on global warming, understanding the main drivers of greenhouse gas (GHG) emissions is important. This paper investigated the contribution of intrinsic reasons for consumption-based GHG emissions growth using structural decomposition analysis based on world input-output database from 1995 to 2009. The drivers are decomposed into five sub-effects at both country-level and industry-level. The results are as follows: (1) The rapid global economic growth is the dominating driving force. However, a decreasing emission intensity caused by the improvement of energy efficiency and technology innovation can contribute significantly to emission reduction; (2) Key factors contributing to GHG emissions vary in different country groups. The investment effects in developing countries are overwhelming those in developed countries. Instead, the net export effects in developed countries are greater than them in developing countries, which means that developing countries are becoming pollution haven; (3) China and India are still the key contributors of CO2 growth and CH4 growth. In developing countries, the total effects of N2O emissions changes are positive, which is mainly because agriculture plays an important role in these countries; (4) Cluster analysis depicts the relationship between growth of GHG emissions and gross domestic outputs in different countries.
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Cities do play significant roles in tackling global environmental changes. Decoupling economic growth from environmental pressures is critical for global sustainable development, however, few studies pay attention to the decoupling analysis at city level. This paper conducts a comparative study of the decoupling performance of economic output from CO2 emissions between Beijing and Shanghai, the top two cities in China. In this paper, the decoupling trends and the decoupling effects are explored from a sectoral perspective, by combining the Tapio decoupling elasticity and the logarithmic mean Divisia index (LMDI) model. The results show that Beijing and Shanghai both experienced weak decoupling in construction, expansive negative decoupling in transport, expansive coupling in trade, and weak decoupling in others over the period 2000–2015. Moreover, agriculture appeared strong decoupling in Beijing, and recessive decoupling in Shanghai; industry showed strong decoupling in Beijing, and weak decoupling in Shanghai. The decoupling effects showed different magnitudes and patterns in industrial sectors between Beijing and Shanghai. Overall, per-capita GDP and population growth inhibited the decoupling, while energy intensity, industrial share, energy mix accelerated the decoupling process.
Article
Decomposition analysis has become a popular tool to study CO2 emissions and, in this study, we developed a combined decomposition approach to emissions analysis by integrating the logarithmic mean Divisia index and production-theoretical decomposition analysis. Based on this novel approach, we investigated the driving factors of CO2 emissions in China over the latest Five-Year Plan period (2011–2015) and analyzed the inequality characteristics of such emissions. The results showed that 1) the peak value of CO2 emissions in China declined over the period; 2) the overall inequality presented a decreasing trend, whereas intragroup inequality presented a slightly increasing trend over the period; and 3) generally, the potential energy intensity effect contributed to the decrease in CO2 emissions in developed provinces, whereas the potential carbon factor effect accounted for the decrease in CO2 emissions in less-developed provinces. Based on our empirical results, we recommend that policy-makers consider several factors when implementing CO2 policies.
Article
The world has witnessed unparalleled economic development over the past decades, but accompanied by large amount of carbon emissions, which triggered the global warming. It is critical for the global sustainable development by decoupling economic growth from carbon emissions at country level, specifically for the largest emitter, China. This study conducts a decoupling analysis from the perspective of carbon intensity (CI), per capita carbon emissions (PC) and total carbon emissions (TC) with reference to 30 Chinese provinces, covering the period of 2001–2015. Based on the Log Mean Divisa Index (LMDI) method, the effects of energy structure (ES), energy intensity (EI), economic output (EO) and population size (P) on TC at provincial level are investigated. Results show that: (1) a strong decoupling relation between GDP and CI is found in most provinces except Hainan, Qinghai and Xinjiang, while there is large room for China to decouple completely from PC and TC; (2) EO and EI are the dominated inhibiting and promoting factors respectively for carbon emission reduction; (3) ES effect on increasing carbon emission changes between positive and negative, while P has a positive but insignificant effect on the increase of carbon emissions for most provinces. The results help local governments formulate measures to coordinate regional economic development and carbon emission reduction.
Article
China predominantly relies on thermal power generation to meet its power requirement, which has led to a major increase in total CO2 emission and poses a huge threat to the development of power industry. In order to reduce CO2 emission in power industry and develop economy simultaneously, it is necessary to study how to achieve the strong decoupling relationship between CO2 emission in power industry and GDP in China. However, such studies are relatively limited so far. Thus, this paper mainly inquiries the major driving factors on the decoupling during the period of 1985–2016. First, the decoupling state in China is quantified by using the Tapio decoupling indicator. Then, this paper carries out the decomposition of the decoupling index to explore the driving factors affecting the decoupling by the logarithmic mean divisia index (LMDI) method and Kaya identity equation. Finally, energy consumption in power generation, thermal power structure, power generation structure, transmission and distribution loss, electrification, energy intensity and economic scale are explored to discuss the decoupling relationship with respect to the CO2 emission reduction. The results show that the decoupling relationship is in an alternating state between weak decoupling and expansive negative decoupling in 1985–2016. And the influences of seven factors on the decoupling relationship are of difference. Wherein, energy intensity as well as energy consumption in power generation, promotes the decoupling while both the economic scale and electrification are the two main factors that inhibit the decoupling. The other three factors have relatively weak effects. Therefore, based on the empirical results, this paper puts forward some policy suggestions to effectively promote the decoupling between China's electric CO2 emission and economic growth.
Article
The contradiction between economic growth and carbon emissions in China and India is the most prominent in the world. Both countries have faced tremendous pressures to curb carbon emissions, because they are major source of new added emission sources. Meanwhile, both countries have faced greater pressures to achieve industrialization and urbanization in order to eradicate poverty. Better understanding the decoupling status and its drivers can serve to develop effective policy to achieve economic growth without an increase in emission. This paper comparatively analyses the decoupling effect of the economic growth from the carbon emissions as well as its drivers during the period 1980–2014 in China and India. The Tapio decoupling model was used to analyze the decoupling status, and the co-integration theory and the impulse response functions were applied to investigate the effects of urbanization, industrialization, per capita GDP and carbon emission intensity to decoupling. The results show that China mainly performed a weak decoupling of economic growth from carbon emissions in 1980–2014, while the decoupling status of India was no regular. In China, carbon emission intensity is the biggest contributor of decoupling, followed by urbanization, per capita GDP, and industrialization. In India, the biggest driver of decoupling is also the carbon emission intensity, followed by urbanization, industrialization, and per capita GDP. Therefore, improving energy efficiency is the best policy to toward economic growth without emission growth in China and India.
Article
Investigation of China's Carbon dioxide (CO2) emissions peaking has become a popular topic. Under the mandatory push of the national policy, exploring the challenges of achieving carbon emission peaking deserves enough attention. In this study, a hybrid method combing logarithmic mean divisia index (LMDI) and decoupling index approach, called LMDI-D, is proposed to model the challenges faced by China to achieve its CO2 emissions peaking in 2030. This problem is examined from the perspective of historical trend and future prediction. The results indicate the following: (1) The effects of economic growth are far much larger than the other inhibiting effects of energy intensity and carbon emissions coefficient on the increase of China's CO2 emissions; (2) Increment of total CO2 emission in China shows a steady downward trend under the together influence of different factors, which is good news for the “2030 target”; (3) The decoupling relationship between China's CO2 emissions and economic growth will be stronger during 2015–2030, which is the necessary condition for China to reach its “2030 target”. Overall, the goal for China's to peak its CO2 emissions in 2030 is a challenging task. Finally, several suggestions were put forward to achieve total CO2 emissions reduction in China.
Article
Russia’s energy-related carbon emission decreased by roughly 30% between 1992 and 2017. Previous studies reported that economic recession led to carbon emission reduction in Russia during 1990s. This paper aims to examine whether the economic recession remains to lead to a decline in Russia’s carbon emission for 1992–2017. The results show that not economic recession, but improving energy efficiency is the most significant contributor to decreasing Russia’s carbon emission from 1992 to 2017. Economic recession is the major contributor to the decrease in Russian carbon emission only before the new century and then reversed to the leading contributor to the increase in carbon emission. This research also finds that a shift to less carbon-intensive fuel and decrease in population also contribute to offsetting carbon emission in Russia. Thus, this research argues that the cause for the decline in Russia’s carbon emission for 1992–2017 is not economic recession. Indeed, Russia’s economic activity and change in carbon emission have been delinked since the new century. It can be concluded that the reduction in Russia’s carbon emission during 1992–2017 arises from a combination of improving energy efficiency, a shift to less carbon-intensive fuel, and decrease in population.
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Renewable energy consumption has been promoted to mitigate climate change problems under various schemes, such as the Kyoto Protocol and the Paris Agreement. A country's choice of energy resources depends on the balancing of economic growth and environmental degradation, which will be closely related to its development stage. This study examines how the relationship between renewable energy consumption and carbon emissions is associated with the development stage by applying a panel cointegration analysis to 107 countries during the period from 1990 to 2013. The analysis shows the clear differences between the groups of low- and high-income countries. For low-income countries, renewable energy consumption is positively and negatively associated with carbon emissions and output, respectively. However, for high-income countries, renewable energy consumption is negatively and positively associated with carbon emissions and output, respectively. These results have important implications for policymakers, since the discrepancies in these relationships mean that a country's renewable energy policies should be highly compatible with its development stage.
Article
To decouple the economic growth and carbon emission has been considered imperative to promote low-carbon economy. Nevertheless, previous studies on decoupling analysis between economic growth and carbon emission were contextualized merely in individual countries rather than the globe, which are insufficient for developing the low-carbon economy as a global target. Carbon intensity (CI), carbon emission per capita (CP), and total carbon emission (TC) serve as three important indicators of the status of regional carbon emission, but only decoupling economic growth from TC was analyzed in previous studies. To close the two gaps, this study aims to investigate the global decoupling statuses of economic growth from not only TC but also CI and CP by using Tapio decoupling index. The decoupling statuses of 133 countries and income-level groups to which they are classified are identified using the data from 2000 to 2014. According to the results, it is observed that economic growth decouples from CI, CP, and TC in sequential order, which is called three-step decoupling. In the period, countries whose economic growth having decoupled from CI, CP, and TC, account for 74%, 35% and 21% respectively. Higher income-level group has the larger proportion of countries having reached their decoupling statuses. These findings may serve as valuable references for policy-makers to understand the current decoupling statuses and make three-step strategies if necessary towards the global low-carbon economy.
Article
For the world's 20 largest emitters, we use a simple trend/cycle decomposition to provide evidence of decoupling between greenhouse gas emissions and output in richer nations, particularly in European countries, but not yet in emerging markets. If consumption-based emissions—measures that account for countries’ net emissions embodied in cross-border trade—are used, the evidence for decoupling in the richer economies gets weaker. Countries with underlying policy frameworks more supportive of renewable energy and climate change mitigation efforts tend to show greater decoupling between trend emissions and trend GDP, and for both production- and consumption-based emissions. The relationship between trend emissions and trend GDP has also become much weaker in the last two decades than in preceding decades.
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China and the United States (U.S) produce approximately one-third of global economic output, and emit more than two-fifths of global total carbon emissions. Comparing the decoupling of economic growth from carbon emissions in China and the U.S. can inform the development of effective mitigation strategies for those two countries and the world. In this study, we compared both the carbon emissions performance and the decoupling performance between China and the U.S. We quantified the decoupling status in China and U.S. using the Tapio decoupling indicator, and decomposed the decoupling index to explore the driving factors affecting the decoupling using the Logarithmic Mean Divisia Index (LMDI) technique. The results show that China experienced expansive coupling and weak decoupling in most years between 2000 and 2014; the U.S. experienced mostly weak and strong decoupling. In general, income and population effects restricted decoupling, whereas the energy intensity and energy mix effects promoted the decoupling process in China and the U.S. In addition, the carbon intensity effect exerted negative and positive effects on decoupling in China and the U.S., respectively.
Article
The development of economy in developing countries is expected to contribute mostly to the growth of world energy consumption. Using environment Impact-GDP-Technology (IGT) decoupling model, we carry out a comparative study on the decoupling trends of economic growth and energy consumption for both developed and developing countries in past five decades (1965–2015). The results indicate that the decoupling indices of developed countries are superior to that of developing countries. The specific performances are: (1) The decoupling indices of developed countries are shown to be stable and tend to approximate absolute decoupling; (2) The decoupling indices of developing countries fluctuate in the relative decoupling interval. On this basis, this research employs grey relational analysis (GRA) to explore the reasons resulting in the difference of decoupling indices from the perspective of technical progress, industrial structure and economic growth pattern. The findings show that: in developed countries, technical progress factor exerts greatest influence on decoupling indices, followed by industrial structure and economic growth pattern; in developing countries, industrial structure and economic growth pattern have greater impact on decoupling indices than technical progress. Based on research conclusion, this research offers developing countries relevant policy suggestions for energy saving and emission reduction in the future.
Article
This study discusses decoupling trends in world economic growth and CO2 emissions based on decoupling theories. The decoupling trends of economic growth and CO2 emissions in typical developed and developing countries in 1965–2015 are compared by using an OECD decoupling factor model, and Tapio elastic analysis (TEA) method, and the IGTX decoupling model. On this basis, this study evaluates correlations of these three decoupling models by employing the Spearman's rank correlation coefficient. The research indicates that, owing to the IGTX decoupling model being easily affected by other non-environmental factors, the shorter the research period of interest, the more easily the decoupling indices distort, while the accuracy of the TEA method is not limited by the length of the research period of interest. With respect to the overall decoupling trend, the research shows that: (1) strong decoupling is found in developed countries and slightly increases in the stabilisation thereof. The decoupling state in the United Kingdom and Germany is more stable than that of the United States and France. (2) Developing countries demonstrate weak decoupling that fluctuates significantly and lacks regularity. The stabilisation and optimisation of China in decoupling process are better than those of Brazil and India. Finally, according to research conclusions, relevant policies and suggestions are proposed in view of energy savings and emissions reduction in developing countries.
Article
Japan has achieved the decoupling of economic growth from air-pollutant emissions since the rapid decrease in air-pollutant emissions in the 1970s and the further-abatement period. Air-pollutant emissions also decreased in China recently. We analyzed the factors driving the changes in air-pollutant emission, which enabled us to identify each factor's contribution and compare the further-abatement period in Japan with the primary reduction stage in China. This study performed the Logarithmic Mean Divisia Index analysis to decompose the industrial-emission changes (SO2 and NOx) in Japan and China into the socioeconomic factors that drive these changes. Results showed that changes in these factors, especially energy intensity and economic level, contributed differently to the emission reduction in Japan and China because the two countries differed in emission-reduction periods. The decline in emission coefficient, measured by emissions per unit of energy consumption, was the most important contributor to emission reduction in Japan. The other factors did not exert considerable influence. However, energy intensity decrease in China significantly contributed to emission reduction besides emission coefficient, and economic growth had a substantial negative impact on emission reduction. Differences also appeared in contributions from the industrial and economic structure between the two countries. Some factors may have reached their limitation after the rapid reduction period and thus contributed less significantly in the further-abatement period. A tendency toward a similar condition to Japan was also observed in some factorial contributions in China. From a sectoral perspective, emission change was distributed evenly among sectors in Japan than in China. Based on the comparison between the two countries and the “new normal” that China is experiencing, we provided insights for China for further abating industrial air-pollutant emissions in succeeding years.
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This paper analyzes the decoupling states between CO2 emissions and transport development in China from 1994 to 2012. The results indicate that, at the aggregate level, the Chinese transport sector is far from reaching the decoupling state. Negative decoupling or non-decoupling years account for 72.2% of the study period. At the disaggregated level, the decoupling states between CO2 emissions and eight primary fuels are as follows: raw coal and coke are in the absolute decoupling state; crude oil, gasoline and diesel are in the weak negative state; and the other three types (kerosene, heavy fuel oil, and natural gas) are in the strong negative decoupling state. Policy implications underneath the identified decoupling states are also revealed to help China build a more sustainable transportation system.
Article
South China’s Guangdong Province, the Chinese largest provincial economy and the global 14th biggest economy, has been facing a huge challenge of achieving economic growth without emission growth. Developing new strategy for making economic growth compatible carbon reduction requires better understanding of the decoupling carbon emission from economic growth. In this paper, we conduct a comprehensive decoupling and decomposition analysis of carbon emission from economic output in Guangdong Province from a sector perspective. We firstly calculate carbon emission in six sectors based on the energy consumption of each sector and carbon coefficient of 13 types of fuels during 2000–2014, and then quantify the decoupling status between CO2 emissions and economic growth in those six sectors by using the Tapio decoupling index, finally, investigate the influencing factors of emissions by using the decomposition techniques. The modeling results show that agricultural sector has strong decoupling, industrial, transport and others sectors are weak decoupling; construction and trade sectors are expansive negative decoupling. We also find that energy intensity and economic output are the major factors influencing carbon emission, also the effects of energy structure and emission factor among six sectors are studied. Some policy recommendations finally are put forward.
Article
This study predicts the probabilities of achieving the carbon dioxide (CO2) emission targets set by the Paris Agreement and the Intended Nationally Determined Contribution (INDC) of the top ten CO2 emitters (TTCE). The TTCE are China, USA, India, Russia, Japan, Germany, South Korea, Iran, Saudi Arabia and Indonesia based on their emission trends over 1991–2015 period. The methods of trend extrapolation and back propagation (BP) neural networks are used in this paper to overcome the weakness of multiple linear regression (MLR) and the assumptions of the environmental Kuznets curve (EKC). The results show that the model performs well and has high predictive accuracy. The volume of the CO2 emissions by the TTCE in 2030 is predicted to increase by 26.5–36.5%, compared with 2005. According to different trends of economic growth, energy consumption, and changes in share of renewable energy, the results show that China, India and Russia will achieve their INDC targets in some scenarios, whereas there will be a shortfall in achieving targets by USA, Japan, Germany, and South Korea. In particular, the carbon reduction situations of Saudi Arabia, Iran and Indonesia are quite severe. Moreover, the results show that there is no common trend that can be used as a suitable benchmark for every country for the implementation of carbon reductions targets of the Paris Agreement and their INDC goals. Finally, there are signs of improvement of the equality of carbon emissions based on the analysis of the Gini coefficient.
Article
This study explores the driving forces of the changes of national and regional CO2 emissions using temporal decomposition analysis model, and investigates the driving forces of the differences of CO2 emissions between China's 30 regions and the national average using spatial decomposition analysis model. The changes or the differences in national and regional CO2 emissions during 2000–2014 are decomposed into nine underlying determinants. Temporal decomposition results show that economic scale effect is the dominant driving force leading to the increases in both national and regional CO2 emissions, while energy intensity effect is the main contributor to the reduction of CO2 emissions. Contribution of various variables to CO2 emissions between eastern region and central region are roughly same. Spatial decomposition results demonstrate that the differences of CO2 emissions among China's 30 regions are expanding increasingly. Economic scale effect is main driving force responsible for the difference in CO2 emissions among regions, and energy intensity effect, energy structure effect and industrial structure effect are also important factors which result in the increasing differences in regional CO2 emissions. In addition, resource-based and less developed regions have greater potential in the reduction of CO2 emissions. Understanding CO2 emissions and the driving forces of various regions is critical for developing regional mitigation strategies in China.
Article
In this study, an Index Decomposition Analysis-Logarithmic Mean Divisia Index (IDA-LMDI) model was developed to find the drivers behind the changes in CO2 emissions between 1990 and 2012 in Colombia. The results facilitate the assessment of the impact in Colombia of the main measures regarding the mitigation of CO2 emissions. Likewise, it allows us to analyze whether the recent measures implemented by the Colombian authorities to mitigate emissions are moving in the right direction. To carry out the decomposition analysis, six effects were taken into consideration: carbonization, the substitution of fossil fuels, the penetration of renewable energy, energy intensity, wealth and population. The effects of income and population appear as drivers of emissions for the period analyzed. A stylized analysis allows richer conclusions to be extracted regarding a battery of recommendations for emission mitigation policies that are compatible with economic growth in Colombia.
Article
In order to address climate change in an effective manner, it is essential to quantify driving forces of CO2 emissions in the fossil-fuel rich countries. Iran is among the top ten CO2 emitting countries. Moreover, it has the largest natural gas reserve and the fourth largest oil reserve in the world. However, there is a lack of comprehensive analytical studies on quantifying the contributions of key drivers to Iran’s CO2 emissions. This study fills this gap and performs in a systematic manner three variations of decomposition analyses on driving forces of carbon emissions from 2003 to 2014 due to energy consumption of the industry, driving forces of carbon intensity of the electricity generation, and key drivers of carbon emissions due to total fossil fuel combustion. In addition, the other novelty of this study is inclusion of the effect of electricity import and export in the decomposition analysis, which opens important avenues for analysis of emissions’ driving factors in countries currently engaged, or will engage in electricity trade. In the discussion of results, we take an international perspective and discuss findings pertaining to Iran as a fuel-rich country. Furthermore, we demonstrate real applications of decomposition analysis in policy-making using real experiences of Iran. Major findings highlight that the main driver to Iran’s CO2 emissions is increased consumption, which was responsible for an additional 201.5 MtCO2 since 2004, while technology-related improvements (e.g. energy mix) were only able to offset 7.7 MtCO2. Additional natural gas capacity, especially in the transport sector helps improve the energy mix, but would require more. Insights on electricity trading and hydropower are also presented, before we end with appropriate policy implications.
Article
Purpose The purpose of this paper is to investigate the effects of industrialization and urbanization on CO2 emissions in 20 African countries for the period 1980 to 2013. Design/methodology/approach In order to correct for cross-sectional dependence, this study adopts the use of pooled mean group. Also, the study contributes to the literature by estimating the direct, indirect and total effects of industrialization and urbanization on carbon emission. Findings The results show that industrialization and urbanization directly increase environmental degradation. Interestingly, industrialization and urbanization were also found to reduce environmental degradation through their indirect effects on per capita income. In general, the authors conclude that the indirect effect of industrialization will overcrowd the direct effect, and this will lead to a decline in the overall effect of industrialization on carbon emission. Also, the positive direct effect of urbanization outweighs the negative indirect effect, thus the overall effect of urbanization will endanger carbon emission in the long run. Originality/value The existing studies on emission, industrialization and urbanization have typically been biased toward Africa. This present study filled this gap. The choice of African countries is based on the notion that the continent is desirous of expanding her industrialization level. This has coincidentally led to the increase in urbanization growth rate as well as income level of former rural dwellers. The second contribution of this study is the “effects decomposition” into direct, indirect and total effects. This is to reveal some inherent information that might be missing.
Article
Based on a structural decomposition analysis within a multi-regional input-output analytical framework, this study analyzes and compares the changes in and geographic sources of the emissions embodied in trade (EET) at the city level. It also examines how and why the EET changed in four Chinese mega-regions between 2002 and 2010. One finding is that the geographic sources of Beijing's, Tianjin's, and Shanghai's emissions embodied in exports (EEE) are mainly located in the provinces of the Tianjin-Hebei-Henan areas and the east coast regions of China, whereas the geographic sources of Chongqing's EEE are primarily concentrated in the southeast of China and central China. Conversely, Beijing's, Tianjin's, and Shanghai's emissions embodied in imports (EEI) are strongly associated with the provinces of Northern and North Central China, whereas Chongqing's EEI are mainly related to the southeast of China and the Hebei-Henan areas. Another important finding is that a megacity's EEE are most affected by demand in the other regions and production in the local city, whereas its EEI are largely determined by demand in the local city and production in the other regions.
Article
As a major contributor to carbon dioxide emissions, the electric power sector has instigated significant changes in environmental issues. To show the effectiveness of the program, research on whether the changes of electricity production and CO2 emissions are out of sync are conducted by applying a decoupling elasticity analysis method. Then the decoupling index from the electricity analysis on the basis of the extended multilevel LMDI method are applied to study Shandong Province, covering the period from 1995 to 2012. Finally, a comparative decoupling stability analysis is applied. Our results indicate electricity output and coal consumption play significant roles in determining levels of CO2 emissions. Also, “relative decoupling” and “no decoupling” were the main states during the study period. We also found that the decoupling index performed better (in terms of stability) than did the electricity output elasticity of CO2 emission.
Article
Using an extended Kaya decomposition, we identify the drivers of long-run CO2 emissions since 1800 for Denmark, France, Germany, Italy, the Netherlands, Portugal, Spain, Sweden, the UK, the United States, Canada and Japan. By considering biomass and carbon-free energy sources along with fossil fuels, we are able to shed light on the effects of past and present energy transitions on CO2 emissions. We find that at low levels of income per capita, fuel switching from biomass to fossil fuels is the main contributing factor to emissions growth. As income levels increase, scale effects, especially income effects, become dominant. Technological change proves to be the main offsetting factor in the long run. Particularly in the last decades, technological change and fuel switching have become important contributors to the decrease in emissions in Europe. Our results also contrast the differentiated historical paths of CO2 emissions taken by these countries.
Article
Since industrial sector is a leading energy consumer and CO2 emitter in China, the degree of the decoupling of CO2 emissions and industrial growth plays a critical role in realizing the energy-conservation and emission-reduction goals of China. This is the first study to present a specific investigation on the decoupling of CO2 emissions and industrial growth in China from 1993 to 2013. Using an extended logarithmic mean Divisia index (LMDI) model focusing on both energy-related and process-related CO2 emissions and introducing three novel investment factors, i.e., investment scale, investment share, and investment efficiency, we highlight and explore the remarkable role of investment in the mitigation and decoupling of CO2 emissions with industrial growth. The results show that China's industrial sector experienced the weak decoupling during 1993–2013. The investment scale is the most important factor responsible for the increase in CO2 emissions and the inhibition of the decoupling. The investment efficiency effect has a volatile trend and overall, it plays the most significant role in reducing CO2 emissions, followed by the energy intensity effect and process carbon intensity effect, whereas the energy mix, carbon coefficient, and investment share have marginal effects. Among 36 industrial sub-sectors, the seven factors of RCMCP (raw chemical materials and chemical products), NMP (nonmetal mineral products), and SPFM (smelting and pressing of ferrous metals) have significant effects on the decoupling. Thus, the three sub-sectors should be among the top concerns for abating CO2 emissions. Finally, we provide policy recommendations considering both conventional and investment factors for China's industrial sector to realize emission reduction targets.
Article
To study the relationship between China's regional economic development and industrial carbon emission, reveal the major influencing factors and mechanism of carbon emission change in all regions, and provide theoretical evidence for governments to formulate emission reduction strategies and policies, big data analysis and the Tapio extended model were adopted to quantitatively analyse the decoupling relationship between carbon emission and economic growth in eight major regions of China between 1996 and 2012. Logarithmic mean Divisia index (LMDI) was also applied to decompose the main factors affecting carbon emission change in all regions. The results show that (1) the proportions of industrial energy related to carbon emissions in central China and the Beijing-Tianjin region decreased year by year while the opposite was the case in coastal areas of northern China. Furthermore, the proportions in other regions basically remained unchanged; (2) a weak decoupling relation between industry energy carbon emission and economic growth was found in most regions except in northwest China during the period 1996–2000, southwest China, south and north coastal regions during the period 2001–2005, Beijing and Tianjin during the period 2010–2012. Energy consumption decoupling factors exerted a consistent positive effect on industry energy carbon emission decoupling, with decoupling impact greater than emission factors; (3) the overall level of carbon emission reduction technology in China was low and backwards, and limited contributions have been made to economic growth and industry energy carbon emission decoupling. Development emphases of decoupling should be put on energy-saving technology promotion, industry structure upgrading and energy structure improvement in the future; (4) economic intensity effect has exerted the most powerful positive influence on carbon emissions, except in developed areas, and the positive effect was weaker than that in other regions.
Article
We study the impact of US quantitative easing (QE) on both the emerging and advanced economies, estimating a global vector error-correction model (GVECM). We focus on the effects of reductions in the US term and corporate spreads. The estimated effects of QE are sizeable and vary across economies. First, we find the QE impact from reducing the US corporate spread to be more important than that from lowering the US term spread, consistent with Blinder's (2012) argument. Second, counterfactual exercises suggest that successive US QE measures might have prevented episodes of prolonged recession and deflation in the advanced economies. Third, the estimated effects on the emerging economies are diverse but generally larger than those found for the United States and other advanced economies. The estimates suggest that US monetary policy spillovers contributed to the overheating in Brazil, China and some other emerging economies in 2010 and 2011, but supported their respective recoveries in 2009 and 2012. These heterogeneous effects point to unevenly distributed benefits and costs of cross-border monetary policy spillovers.
Article
Developing economies like Nigeria are competing strategically to ensure a rise in sustainable economic growth, and reduction in CO2 emission. The question is, could this be possible amidst the series of energy crises facing the country? It is against this development that this paper investigates empirically if the Nexus between economic growth, energy consumption, financial development, trade openness and CO2 emissions in Nigeria could provide a clue. The study used time series data from 1971to2011. To ensure a robust result, the study applied the ARDL bounds testing approach to cointegration, the Zivot–Andrew structural break test, and the Bayer–Hanck combine cointegration analysis. The causality analysis, was checked using the VECM model and this was validated using the innovative accounting and the impulse response test. The findings of the study revealed that financial development stimulates energy demand, but lowers CO2 emissions. Economic growth lowers energy demand but increases CO2 emissions. In addition to that, the study discovered how Trade openness increases energy consumption but improves Environmental quality by lowering CO2 emissions. Energy consumption was on the other hand, found to have significant increase on CO2 emissions. The Granger causality analysis revealed a bidirectional causal relationship between financial development and energy consumption, and the same inference was found in financial development and CO2 emissions. In this study, trade-led energy hypothesis and the existence of a feedback effect between economic growth and CO2 emissions were discovered. The study recommends massive investment in Nigeria’s financial sector with the motivation for these sectors to invest in efficient, and sustainable renewable energy system. How it should be done and why it should be done are carefully outlined in this study
Article
We study changes in the aggregate carbon intensity (ACI) for electricity at the global and country levels. The ACI is defined as the energy-related CO2 emissions in electricity production divided by the electricity produced. It is a performance indicator since a decrease in its value is a desirable outcome from the environmental and climate change viewpoints. From 1990 to 2013, the ACI computed at the global level decreased only marginally. However, fairly substantial decreases were observed in many countries. This apparent anomaly arises from a geographical shift in global electricity production with countries having a high ACI increasingly taking up a larger electricity production share. It is found that globally and in most major electricity producing countries, reduction in their ACI was due mainly to improvements in the thermal efficiency of electricity generation rather than to fuel switching. Estimates of the above-mentioned effects are made using LMDI decomposition analysis. Our study reveals several challenges in reducing global CO2 emissions from the electricity production sector although technically the reduction potential for the sector is known to be great.
Article
China has a coal addiction that has worsened over time. Its share of the world׳s total final coal consumption more than doubled over the past decade. This fast growth of coal consumption presents serious challenges to the country׳s carbon emission. In 2011, burning coal contributed 72% of China׳s CO2 emission and 19% of global CO2. A better understanding of the trajectory and drivers of Chinese coal usage will help catalyse Chinese efforts to kick its heavy addiction to coal. We analyze China׳s coal consumption during 1955–2011 using time-series data energy consumption, population, gross domestic product, and industrial production. Based on the change of its total coal consumption and coal consumption intensity, China׳s coal use for 1955–2011 is divided into six phases. Next, this paper quantifys the driving forces in each phase and drivers of coal consumption intensity, using the Logarithmic Mean Divisia Index (LMDI) technique. The result shows there is a strong positive correlation between economic growth and coal consumption, the coal intensity and economic output of second industry is the leading contributor to change of coal consumption intensity. Three policy recommendations are offered for China kicking its coal habit. This paper argues that improving coal consumption efficiency is the more optimum policy.