Carbon emission and production technology: evidence from the US

Transcription

1 MPRA Munich Pesonal RePEc Achive Cabon emission and poducion echnology: evidence fom he US Soumyananda Dinda Chandagup Insiue of Managemen Pana, Biha, India, UN ESCAP 26. Febuay 2011 Online a hp://mpa.ub.uni-muenchen.de/31935/ MPRA Pape No , posed 15. July :23 UTC

2 CARBON EMISSION AND PRODUCTION TECHNOLOGY: EVIDENCE FROM THE US Soumyananda Dinda Chandagupa Insiue of Managemen, Pana -01, India Addess P. R. Hindi Bhawan, Chhajjubagh, Pana , Biha, India. Ph: & 2011 Absac Poducion echnology is he main diving foce of economic gowh while upgaded echnology educes cabon emission. This pape invesigaes he long un elaion wih sho un dynamics using he USA daa fo he peiod of This pape obseves ha poducion echnology is he cause of educion of CO 2 emission only in sho un. The impulse esponse of poducion echnology suggess shoening he paen poecion igh ha migh encouage edesigning low cabon poducion pocesses o cuve down cabon emission wih aising income. Coninuous change and adapion of poducion echnology is he main diving foce fo susainable developmen. Keywods: Poducion Technology, Innovaion, Design Paen, Paen Righ, Technological Pogess, Co-inegaion, Causaliy, Cabon Emission, Income, CO 2 Emission, Impulse Response, R&D. JEL Classificaion: C 33, O 40, Q Addess fo coespondence: Chandagup Insiue of Managemen Pana, Hindi Bhawan, Chhajjubagh, Pana , Biha, India. Ph: / / ; Fax: ; sdinda2000@yahoo.co.in, s_dinda@homail.com, sdinda@gmail.com.

3 CARBON EMISSION AND PRODUCTION TECHNOLOGY: EVIDENCE FROM THE US Fossil fuel cabon emission geneaed by he US has been inceasing coninuously ove he long pas seveal decades, while a he same ime; he numbe of echnological innovaion (design paens) has been inceasing apidly. Figue 1 shows he ising ends of CO 2 emission and design paens epesening echnological innovaions. Pe capia cabon emission is also no declining excep in mid 1970s (Figue 1C). I shows clea evidence ha echnological innovaion and cabon emission have been inceasing seadily ove seveal decades. I conadics geneal pecepion abou echnology, which plays a cucial ole o cuve down cabon emission. Wha is he ole of innovaion in he conex of climae change? Does he ising innovaion educe fossil fuel consumpion and heeby cabon emission? Fom , oal cabon emission emied by he US inceased yealy 1.39 pecen and pe capia cabon emission also aised by 0.39 pecen, while he ganed design paen gew 4.76 pecen. Duing only pe capia CO 2 emission gowh ae declined by 0.04 pecen which is good fo he US bu less han desied level, while annual gowh ae of oal fossil fuel cabon emission and design paen inceased by 1.14 and 6.86 pecen, especively. Secion I of his pape discusses on poducion design paen and explains a simple heoy how i helps o educe polluion in a gowing economy. Secion II povides empiical esuls ha gowh of poducion design innovaions educes emission in sho un only. In long un, boh innovaion and emission ise especially long pas innovaions (design paens) ae he cause of inceasing cabon emission in he US. This finding helps o fomulae pope economic policy o aes he ising CO 2 emission. 1

4 Tuly, ecen global climae change challenges o he exising poducion echnology in he wold. To ackle he climae change geneal opinion is he adapion of he geen o clean echnology. Geneal pecepion is ha developed naions have he clean and geen echnology ha is acquied hough innovaions which is poeced in he name of paen ighs. I is discussed in deails in secion I. Secion II uses daa fom he US Paen and Tademak Office (USPTO) o show he end of design paens. The US economy dominaes in holding he wold paens. Definiely he US migh have been aemped o innovae geen echnology o dominae is posiion ove he wold economy. Paen egisaion a he USPTO is high and dominaes is posiion in he wold ove las seveal decades. Theefoe, i is highly expeced ha he US should povide efficien echnology boh in ems of poduciviy and enegy saving innovaions. So, as pe geneal believes, he US should be he leas pollue in he wold. In conas, he US is on he op of cabon emies lis 1 in he cabon dioxide infomaion analysis cene (CDIAC) of Oak Ridge Naional Laboaoy (ORNL), USA. Why is he US on he op pollues lis while i holds he majo paens of upgaded poducion echnology? I conadics geneal believe ha he moden sophisicaed upgading echnology helps o miigae climae change. How fa is i ue? This pape invesigaes i hooughly aising few quesions on geneal pecepions whehe developed counies have significan clean echnology ha should have had sufficien poenial sengh o miigae climae change. Ae poducion echnological innovaions in he igh diecion owads he low cabon gowh? This sudy focuses on echnology aspecs especially fo poducion echnology ha migh be obseved in he poducion design innovaions, which help 1 China and he US ae in he op lis of oal cabon emission. China and he US hold 1 s and 2 nd posiion in CO 2 emission in he wold in 2007, especively. 2

5 o he poducion pocess o be efficien in ems of eihe poduciviy o enegy saving. Ulimaely enegy equiemen pe uni of oupu will be less fo each poducion design innovaion. So, any impovemen in poducion sysem hough ceain change in onamenal design of poduc o poducion pocess helps o save enegy and educe emission. Each poducion design innovaion should be enegy efficien. Inuiively echnological innovaions could be he cause of educion of cabon emission. Climae change is a global public good and acs as a consain fo economic gowh. A caeful sudy is necessay o undesand he causal elaionship beween poducion design innovaion and cabon emissions. This pape aemps o invesigae he long un equilibium elaionship beween poducion design innovaions, economic gowh and cabon emissions wih sho un dynamics. I is impoan o fomulae pope policy fo miigaing climae change fo he couny and he wold as a whole. Poducion echnology plays a vial ole fo he low cabon and geen economy. I. Poducion Technology A. Poducion Design Innovaions and Paens Technological innovaion is a vas aea bu his sudy mainly concenaes on poducion design innovaion 2 which is he main concen of cabon emission in he poducion pocess. Geneal believe is ha as numbe of paen on poducion design innovaion inceases, he enegy consumpion educes and heeby miigaes climae change. This is impoan o ackle he global climae change wih appopiae policy 2 Uiliy innovaion is excluded. 3

6 and fomulae saegy fo economic developmen wih ising poducion design innovaions. Paen is an impoan legal documen, issued by an auhoized govenmen agen, ganing he igh o exclude anyone else fom he poducion o use of a specific new device, o pocess fo ceain defined yeas. I is issued, geneally, o he inveno of he device o pocess afe a hoough examinaion focusing on boh he novely of he claimed iem and is poenial uiliy. The igh embedded in he paen can be assigned by he inveno o somebody else, usually o his employe, a copoaion, and/o sold o o licensed fo use by somebody else (Giliches 1990, p1662). The main pupose of he paen sysem is o encouage invenion and echnical pogess boh by poviding a empoay monopoly fo he inveno and by focing he ealy disclosue of he infomaion necessay fo he poducion of his iem o he opeaion of he new pocess (Giliches 1990). Thus, paen egisaion is consideed as a poxy fo innovaion and povides couny s echnological capabiliies (Giliches 1990, Lall 1992, Achibugi and Coco 2004, 2005). So, he paen egisaion of a couny shows he ends in he impovemen of echnological sengh (Tong and Fame 1994). This pape consides he poducion design paen (DGPNT) as a poxy of poducion echnology. Poducion design paen is issued fo new, oiginal and onamenal design fo an aicle of manufacue. Make ambiions ae he pime move fo new innovaions in a maued capialisic economy (Lall (1992)). The echnological pogess owads geen should be capued in ems of poducion design paens which mus be efleced wih less polluion in he efficien poducion pocess. Thus, his pape ies o ague ha gowing poducion design paen migh be he cause of educion of polluion. 4

7 Gossman and Kuege (1991), Komen e al. (1997), Andeoni and Levinson (2001) sugges ha envionmenal qualiy impoves wih echnological pogess. Bunnemeie and Cohen (2003) highligh on he deeminans of envionmenal innovaion in he US manufacuing indusies. Using a panel of 127 manufacuing indusies ove he peiod , Caion-Floes and Innes (2010) idenify bidiecional causal links beween envionmenal innovaion and oxic ai polluion. Caion-Floes and Innes (2010) find ha envionmenal innovaion is an impoan dive of educions in US oxic emissions. Duing he ai polluion (SO 2, NO 2, CO and VOC) geneaed in he US manufacuing seco declines due o echnological advancemen (Levinson 2009). Levinson (2009) did no focus on CO 2 emission, which is he main culpi of global waming and climae change ha may ac as a consain fo fuhe economic gowh. Using he US daa, his pape invesigaes he causal linkage among income, poducion design innovaion and cabon emission a sudy on he long un elaion wih sho un dynamics. B. Theoeical backgound Poducion funcion Following Solow (1956), consideing one- good economy, oupu is poduced by only composie capial, k, fo a given echnology. Poducion funcion of his economy (inensive fom) is y f (k), f 0 and f 0. (1) k kk The poducion of he economy, y, depends only on composie capial k, which also geneaes polluion as a by-poduc. 5

8 Polluion and Choice of Technology Polluion is unavoidable and an inheen elaion wih poducion pocess using capial fo any available echnology. Only echnological impovemens eliminae polluion. Suppose, be he ae of polluion, is a popoion of oupu. Polluion ae,, may be a deceasing (inceasing) funcion of echnological impovemen. Fo simpliciy, iniially his pape assumes consan. Polluion is geneaed diecly wih poducion bu invesely wih available cleane echnology. The polluion flow a each momen is popoional o oupu poducion and invese o he echnological availabiliies, i.e., y p, 0 1 (2) A Whee p is he polluion, A is he numbe of available clean echnology in he economy. Highe value of A suggess moe available clean echnology (Reis 2001) in he economy. Choice of echnology depends on availabiliy and accessibiliy fo all. Fo low value of A choice is limied wheeas highe value of A povides moe alenaives and feedom of choice fo cleane echnology. Basic assumpion is ha any upgadaion in poducion design in ems of eihe poduciviy o enegy efficiency is consideed as clean echnology. I suggess ha any poducion design innovaion inceases oupu fo given inpus o less inpus ae equied fo given oupu. Thus, pe capia oupu equies less inpu. In ohe wods, wih poducion design innovaions he inpu-oupu aio deceases and consequenly pessue on envionmen educes. Polluion is geneaed diecly wih poducion fo a given echnology a given ime. Howeve, ove ime a naion moves owads moe and moe clean echnology 6

9 hough coninuous upgadaion o/and innovaion. So, clean echnology also changes ove ime and become cleane. The innovaion oucome depends on he R & D expendiue, physical and human capial. Thus, sock of capial and echnological pogess joinly deemine polluion, p, in long un 3. The long un elaion is (aking log of eq.(2)) ln p ln ln y ln A (3) Seady Sae The seady sae elaionship beween he gowh ae of polluion, income and echnology is deived fom eq.(3), (diffeeniaing wih espec o ime,) i.e., p p y A (4) y A Eq (4) suggess ha clean echnological pogess definiely educes polluion gowh. Le elaxing he assumpion of consan, μ, ae of polluion. Polluion popoion of oupu, μ, (i.e., ae of polluion) may change ove ime. Le e 0 (5) Whee 0 (>0) iniial polluion ae, ( 0, o, 0 ) is a consan and is ime vaiable. So, ln ln (6) 0 Now plug he equ. (6) ino equ.(3), we ge ln p ln 0 ln y ln A (7) and coesponding seady sae elaionship will be p p y A (8) y A 3 Accoding o Andeoni and Levinson (2001) he inceasing eun o scale opeaes in he abaemen echnology and educes polluion. 7

10 Theoeically i is clea ha polluion gowh ae inceases wih economic gowh bu clean echnological pogess in poducion pocess educes polluion in long un. Empiical veificaion is impoan in his conex. Now we veify is empiical validiy using a couny specific daa. II. Empiical Saegy A: Daa and Mehodology Daa Souces Paen egisaion is consideed as a poxy fo innovaion and povides couny s echnological availabiliies. Ove ime annual paen egisaion of a couny shows he ends in he impovemen of echnological sengh. This pape consides he poducion design paen (DGPNT) as a poxy of poducion echnology which ae supposed o educe polluion. In his sudy, i is measued as he numbe of poducion design paen 4 (DGPNT) pe million populaions. Time seies daa on DGPNT fo he peiod ae aken fom US paen office websie. The coesponding annual ime seies daa on pe capia CO 2 emission (PcCO2) (expess in meic ons) fo he peiod is obained fom Cabon Dioxide Infomaion Analysis Cene 5 (CDIAC), he USA; and pe capia eal GDP (RGDPCH) ae aken fom Penn Wold Table 6.3. Combining hese daa ses ogehe we compile ime seies daa se fo he USA coveing he peiod I excludes he uiliy paens. Toal numbe of design paen is divided by populaion (in million) o make DGPNT pe million populaions. This pape is based on he basic assumpion ha numbe of paens ganed in a yea is equivalen o numbe of innovaions occu in ha yea. Design paen pemis is owne o exclude ohes fom making, using, o selling he design fo a peiod of 14 yeas fom he dae of paen gan. See he websie hp:// 5 This cabon dioxide emission daa geneaes fom manufacuing indusy, which is appopiae fo his sudy. See, Oak Ridge Naional Laboaoy (ORNL) of he USA, hp:// 8

11 Chaaceisics of Daa We have o invesigae he chaaceisics of daa se. The augmened Dickey-Fulle (ADF) and KPSS (Kwiakowski, D., Phillips, P.C.B., Schmid, P., and Shin, Y.) uni oo es pocedues ae used hee o examine whehe daa ae saionay o nonsaionay and hen find he co-inegaion, if any. Co-inegaion ess is equied when all vaiables ae inegaed of ode one i.e., I(1). All he vaiables have uni oo and heeby hey ae non-saionay. Mehodology Engle and Gange (1987) show ha if wo seies ae I(1), hen Gange causaliy mus exis in a leas one diecion in I(0) vaiables. Accoding o Engle and Gange (1987), co-inegaion shows he long un equilibium elaionship among vaiables and sho un dynamics. In case wo seies ae I(1), a VAR model can be consuced in ems of hei fis diffeences wih addiion of an eo coecion em o capue he sho un dynamics wih long un equilibium elaion. This is he Veco Eo Coecion Model (VECM), which is a saisical echnique ha helps o deec he naue of elaionship in long un and sho un dynamics among vaiables in a ime seies daa se. Le he sochasic (o andom disubance) em ( ) is added o he coinegaing equaion (3) o fom he economeics model PcCO2 RGDPCH (9) 1DGPNT 2 and Veco Eo Coecion (VEC) [o moe specifically a VAR wih eo coecion em] is X X i EC 1 (10) Whee X is he veco of diffeence of vaiables, EC is is he eo coecion em deived fom he long un co- inegaing elaionship 9

12 [ PcCO 2 ˆ DGPNT ˆ RGDPCH EC 1 2 ]. Ω is he coefficien maix,, ae he coefficiens of eo coecion ems and andom eo ems, especively. B: Empiical Analysis Peliminay esuls Peliminay obsevaions ae summaised in Table 1, which shows decade wise aveage annual gowh ae of income, cabon emission and poducion design paens (i.e., he poxy of he poducion echnology). Ove all DGPNT gowh ae is 4.76 pecen duing wheeas RGDPCH and PcCO2 gowh aes ae 2.24 and 0.39 pecen, especively. The ciical decade was 1970s in which gowh aes of RGDPCH and PcCO2 deceased bu DGPNT gowh ae declined dasically, i was negaive i.e., -0.3 pecen. In 1980s, he US economy impoved maginally wih emission afe global ecession in following he oil cisis in 1970s; wheeas he gowh ae of DGPNT inceased shaply in 1980s (4.34 pecen) and eached a he pick (6.08 pecen) in he las decade (1990s) of he 20 h cenuy. As soon as echnology shaply inceased in 1980s and consequenly PcCO2 gowh ae declined dasically, i was negaive gowh ae, i.e., pecen in 1980s. Figue 2 povides is gaphical pesenaion of decadal gowh of RGDPCH, PcCO2 and DGPNT. The pimay obsevaions sugges ha hee is a song elaionship beween PcCO2, RGDPCH and DGPNT. Economic gowh heoy also suppos i. Basic findings Le us analyse he chaaceisics of daa. Panel A of Table 2 pesens he esuls of ADF and KPSS es fo DGPNT, RGDPCH and PcCO2. Boh ADF and KPSS uni 10

13 oo es esuls sugges ha all hee vaiables ae non-saionay and inegaed of ode 1, i.e., I(1). The, Phillips-Peon (PP) and Ng-Peon (NP) uni oo ess also suppo I(1). Following Johansen s maximum likelihood appoach saisically significan one co-inegaing veco is idenified using Tace (LR) saisic (see, panel B of Table 2). On he basis of such esuls his pape concludes ha PcCO2, DGPNT and RGDPCH ae co-inegaed. The esimaed long un equilibium elaion o coinegaion elaion is Ln PcCO Ln DGPNT Ln RGDPCH 0 (11) This esimaed long un equilibium elaionship suggess ha boh income and poducion design innovaion aise emission level in he USA. So, in long un poducion echnological innovaion level inceases cabon emission level insead of educion ha conadics ou geneal pecepion and heoeical base (see, equaion (8)). In long un poducion design innovaions ae bad fo he envionmen. I is moe impoan fo he gowh ae ahe han level. In ems of gowh ae definiely echnological pogess educes emission gowh. Analyse Le, and denoe he gowh ae of RGDPCH, DGPNT and PcCO2, especively. Fom Table 3, on he basis of saisical significance, he esimaed equaions can be wien as, , 2 and whee 1, 2 and 3 ae whie noise eo ems wih zeo expecaions. These equaions ake specific fom depending on he saisical significance of individual paamees of VECM. Thus, change of 11

14 echnological innovaion has eached a sage of saionay, flucuaing andomly aound zeo and if any divegence ha leads away fom equilibium. I should be noed ha o is a non-linea funcion of, in his sudy, specifically o is invesely elaed o 1 bu diecly elaed o 3. This implies ha any shock in 1 will be he cause of coesponding negaive shock in o bu any shock in 3 will be he cause of coesponding posiive impac on o. Fom his esimaed equaion i is clea ha change of innovaion in las yea ( 1 ) educes change of emission a cuen yea ( ) bu long pas innovaion, o 3, aises cuen emission o ( ). Any posiive change in echnological innovaion 1 in cuen pas is he cause of educion in he emission gowh ae in cuen yea, o. Hence, hee is causaliy unning fom echnological innovaion o emission. I should be menioned ha 1 suggess some ime is equied o diffuse and insallaion of he new echniques. Moe impoanly, if he new echnological innovaion is inoduced in he economy, hee will be a coesponding educion in he emission gowh ae. Long pas echnology gowh ( 3 ) which povided echnology a ha ime -3 become old now and ha geneaes moe polluion ( ) if we use i now. Long pas echnology is he cause of incease emission. o I is obseved ha income gowh effec is negaive on emission gowh. Pas income gowh, 2, invesely affecs cuen emission gowh, o. I suggess ha economic gowh diecly simulaes o educe emission gowh 6. Hee, income gowh is he cause of emission de-gowh. 6 This is he income effec on emission. 12

15 Lasly, change of income level (income gowh),, depends on he olde poducion design innovaion gowh, 3. I is ue because of he coslie new echnology compae o olde one and he majoiy of he mass adop he old echnology elaively a lowe pice. Hence, he diecion of causaliy is fom echnological pogess o income gowh in he USA duing This povides he evidence on he basic assumpion egading echnological pogess diving economic gowh. I is also ue ha gowh of poducion design innovaion affecs ha of income and emission wihin a ceain ime span. Fom VECM i is also clea ha gowh of DGPNT is puely exogenous and independen vaiable ( 2 ) which is unaffeced by ohe vaiables in his model. Since change of echnological innovaion is no govened by an auoegessive effec, hee is no pesisen effec of any change of emission and/o income on echnological innovaion. This sudy obseves a specific kind of causaliy unning fom echnological pogess o emission in he USA duing Thus, his finding suggess ha apid echnological (innovaions) pogess in he USA helps o educe CO 2 emission gowh in sho un. The poducion design innovaion is he cenal foce ha causes economic gowh as well as de-gowh of cabon emission in sho un. C: Foecas Eo Impulse Response Finally, his pape foecass eo impulse esponses fo fuue peiod using VECM. Using he foecass echnique, his pape highlighs on he eo impulse esponses of he concen vaiables 7. The impulse esponse analysis quanifies he eacion of evey single vaiable in he model on an exogenous shock o he model. The impulse 7 Pape also invesigaes he esponse of poducion design innovaion o CO2 emission. 13

16 esponse analysis is a ool fo inspecing he ine-elaion of he model vaiables. Two special cases of shocks could be idenified: he single equaion shock and he join equaion shock whee he shock mios he esidual covaiance sucue. In he fis case pape invesigaes foecas eo impulse esponses, in he lae ohogonalized impulse esponses. The eacion is measued fo evey vaiable a ceain ime afe shocking he sysem. The impulse esponse analysis is a ool fo inspecing he ine-elaion of PcCO2, DGPNT and RGDPCH. Figue 3 shows he foecas eo impulse esponses fo 20 yeas. Column wise figues (in Fig. 3) show he foecas eo impulse esponses of PcCO2, DGPNT and RGDPCH on all hee vaiables, especively. Fo example, figues of he 2 nd column povide he impac of DGPNT on all hee vaiables (PcCO2, DGPNT and RGDPCH). The cenal figue (in Fig 3) shows ha DGPNT foecass on is own impulse esponse. I also suggess ha afe 10 yeas impulse esponse of DGPNT sabilizes. Fo he coesponding peiod, PcCO2 and RGDPCH impulses also sabilize. Fom his finding his sudy migh sugges o educe paen poecion igh fom is cuen specified yeas. Reducion of he peiod of paen igh encouages he poduces o ake iniiaive fo apid innovaions o edesigns he poducion pocess. Quick adopion of paens definiely helps o educe cabon emission. This may simulae o innovae fo bee and efficien alenaive echnology o cuve down cabon emissions and heeby global waming. So, only he change in poducion echnology is he oo cause of educion of cabon emission wih mainaining economic gowh. 14

17 III. Conclusion This pape focuses on he echnological gowh aspecs especially fo innovaions in poducion echnology which is obseved in he poducion design innovaion. The pape povides evidence ha he long un elaion wih sho un dynamics beween cabon emission, poducion design innovaions and economic gowh. This pape shows ha poducion design innovaions aise cabon emission in long un, which conadics he geneal pecepion. This finding suggess ha pogess in poducion echnology educe PcCO2 gowh in sho un and poducion design innovaion is he cenal foce ha causes income gowh as well as emission educion which is highly desiable. This sudy also obseves a specific kind of causaliy unning fom poducion design innovaion o CO 2 emission in he USA duing The impulse esponse sysem also suppos ha cabon emission is heavily educed in he channel of income gowh. The impulse esponses of poducion design paens sugges shoening he paen poecion igh ha migh encouage innovaing o edesign poducion pocesses ha definiely educe emission in sho un. So, policy makes should give moe emphasis on R & D elaed o poducion design innovaion which helps o cuve down emission wih aising income. I will be moe focused if he daa ae available fo seco o indusy specific and moe epesenaive counies. Moe eseach is equied in his diecion. Refeences Andeoni, J., and A. Levinson The simple analyics of he Envionmenal Kuznes cuve. Jounal of Public Economics, 80:

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19 gowh ae Solow, R. M A Conibuion o he Theoy of Economic Gowh. Quaely Jounal of Economics, 70(1): Table 1: Decade-wise Aveage Gowh ae of Income (RGDPCH), CO 2 Emission (PcCO2) and poducion design paen (DGPNT) in he USA Decade PcCO2 RGDPCH DGPNT Figue 2: Decade-wise Aveage Gowh aes of income, emission and poducion design paen in he USA Decade wise aveage gowh aes of income, emission & echnology in he USA Decade PcCO2 RGDPCH DGPNT 17

20 Table 2: Resuls of Uni oo and co-inegaion es A: Uni oo es ADF KPSS Vaiables Level 1 s Diffeence Tend Saionay lnco ln GDPNT ln RGDPCH B: Co-inegaion Tes Eigen value LR Ciical value 5% Ciical value 1% H o : = 0 H 1 : H : = 1 o H : Noe: (i) Ciical Values (fo end saionay) a 1% and 5% significance level ae and 0.146, especively. (ii) and indicae significance a 1% and 5% level, especively. (a) All hee vaiables follow inegaion of ode one, i.e., I(1). (b) LR es indicaes ha hee is one co-inegaing equaion a 5% significance level. Table 3: Resuls of Veco Eo Coecion Model Esimaed Co inegaion elaion ln PcCO2 ln DGPNT ln RGDPCH Coinigaing veco (-2.597) (-4.66) Loading coefficiens Vaiables D(ln PcCO 2 ) D(ln DGPNT) D(ln RGDPCH) Eo Coecion (-2.93) (0.768) (1.277) VAR Vaiables D(ln PcCO 2 ) D(ln DGPNT) D(ln RGDPCH) D(LPcCO 2 (-1)) (-0.164) (-1.24) 0.03 (0.226) D(LDGPNT(-1)) (-2.31) (-0.89) (-1.24) D(LRGDPCH(-1)) (0.37) (1.053) (1.49) D(LPcCO 2 (-2)) (0.219) (0.18) (-0.265) D(LDGPNT(-2)) (-0.283) (-0.863) (-0.385) D(LRGDPCH(-2)) (-2.299) (0.94) (-0.521) D(LPcCO 2 (-3)) (1.6) (1.26) (0.033) D(LDGPNT(-3)) (2.278) (0.28) 0.08 (2.91) D(LRGDPCH(-3)) (-1.94) 0.17 (0.14) (-0.065) Deeminisic em Consan (-2.934) (0.767) 2.15 (1.293) Tend () (-2.97) (0.832) (1.244) Noe: (i) Figues in paenheses ae -values. (ii), and indicae significance a 1%, 5% and 10% level, especively. 18

21 Emission ('000 MT) No. of design paen Figue 1: Tends of design paens, oal and pe capia CO 2 emission A: The US design paen ganed duing ,000 25,000 20,000 15,000 10,000 5,000 design pa en Yea B: The USA's Toal fossil fuel Emissions duing Emissions Yea 19

22 Figue 3: VECM Foecas Eo Impulse Responses 20

23 Appendix Fig.A1: The US emied oal CO 2 emission and decomposiions duing Souce: CDIAC, ORNL Fig. A2: The US emied pe capia CO 2 emission duing Souce: CDIAC, ORNL 21