Saturday, March 28, 2015

Drivers of Industrial and Non-Industrial Greenhouse Gas Emissions

Another new working paper this time coauthored with my masters student Luis Sanchez. We use the new approach to modeling the income-emissions relationship pioneered by Anjum et al but using total greenhouse gas emission rather than just CO2 emissions from fossil fuel combustion and cement production. This is closer to the discussion I wrote in Chapter 5 of the Working Group III IPCC Report. Anjum et al. used the more limited emissions variable because the IPCC wouldn't allow us to use the data assembled for the report in other research and it took a lot of effort on Luis' part to put the data together from the raw Edgar data. Also, economists are more familiar with the narrow industrial CO2 emissions variable and so we thought we'd do an analysis of that first.

There has been extensive analysis of the drivers of carbon dioxide emissions from fossil fuel combustion and cement production, but these only constituted  55% of global greenhouse gas (GHG) emissions (weighted by global warming potential) in 1970 and 65% in 2010. There has been much less analysis of the drivers of greenhouse gases in general and especially of emissions of greenhouse gases from agriculture, forestry, and other land uses, which we call non-industrial emissions in the paper, that constituted 24% of total emissions in 2010.

The graphs show that non-industrial emissions have a different relationship to income than do industrial emissions. However, there is still a positive relationship between the growth rates of the two variables, especially when we give more weight to larger countries as we do in the paper. Increases in the economic growth rate have about half the effect on non-industrial emissions than they have on industrial emissions.

In both of these graphs China is the large circle on the right. The country with highest non-industrial emissions is Indonesia, which is the largish circle above and to the right of China in the second graph.

We econometrically analyze the relationship between both industrial and non-industrial greenhouse gas emissions and economic growth and other potential drivers for 129 countries over the period from 1971 to 2010. As in Anjum et al., our method combines the three main approaches in the literature to investigating the evolution of emissions and income. We find that economic growth is a driver of both industrial and non-industrial emissions, though growth has twice the effect on industrial emissions. Both sources of emissions decline over time though this effect is larger for non-industrial emissions. There is also convergence in emissions intensity for both types of emissions but given these other effects there is again no evidence for an environmental Kuznets curve.

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