CHEC: China and EU in the Context of Global Climate Change: Analysis of Changing Economic Structures and Related Policies

Transcription

1 CHEC: China and EU in the Context of Global Climate Change: Analysis of Changing Economic Structures and Related Policies FICCA Final Seminar, , High Tech Center, Helsinki

2 Introduction The CHEC project focuses on a crucial issue in future development of mankind: climate change and its impacts on economic structures of the world economy. The futures analyses (global trend and scenario analyses) are performed from the point of view of China and the EU.

3 Critical trade-offs: GDP and population as drivers of electricity production: comparative views (China, EU, Euroarea and U.S.A.) Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

4 Decomposition analysis: Drivers of increasing CO 2 emissions in China and European Union Source: Kaivo-oja, Jari, Panula-Ontto, Juha, Luukkanen, Jyrki, Vehmas, Jarmo, Chen, Y., Mikkonen, S. & Aufferman, Burkhard (2014) Are structural change and modernisation leading to convergence in the CO 2 economy? Decomposition analysis of China, EU and USA. Energy, the International Journal. Vol. 72, August 2014, pp

5 CO2 emission from fuels (Policy and Reference scenarios) Source: Luukkanen, Jyrki, Panula-Ontto, Juha, Vehmas, Jarmo, Liyong, Liu, Kaivo-oja, Jari, Häyhä, Laura & Auffermann, Burkhard (2014) Structural change in Chinese economy: Impacts on energy use and CO 2 emissions in the period Technological Forecasting and Social Change. Forthcoming.

6 Annual percentage changes in logarithmic values of basic ImPACT variables in China, years % 15% 10% 5% CO2 Sectoral Approach (Mt of CO2) Population (millions) GDP PPP (billion 2000 US dollars) Total primary energy supply (Mtoe) 0% -5% Vehmas, Jarmo, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Sustainability analysis of the World, China and India Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

7 Annual percentage changes in logarithmic values of basic ImPACT variables in the world, years ,07 0,06 0,05 0,04 0,03 0,02 CO2 Sectoral Approach (Mt of CO2) Population (millions) GDP PPP (billion 2000 US dollars) Total primary energy supply (Mtoe) 0,01 0,00-0,01-0, Vehmas, Jarmo, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Sustainability analysis of the World, China and India Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

8 Economic growth, energy economy and CO2 emissions: China LCO2 LENE LCO2 LGDP Lapinlampi, George, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Testing for cointegration and EKC hypothesis of GDP, energy, and carbon emissions for China, USA and EU15 in years Research article to Be submitted to review LCO2 LGDP2 LCO2 LGDP3

9 China: Summary of results Emissions and energy use: significant convergence Emissions and GDP develop in the same direction, but with different trends Emissions and GDP squared: no significant correlation Emissions and GDP cubic: possible positive correlation Lapinlampi, George, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Testing for cointegration and EKC hypothesis of GDP, energy, and carbon emissions for China, USA and EU15 in years Research article to Be submitted to review.

10 Economic growth, energy economy and CO2 emissions: EU LCO2 LENE LCO2 LGDP Lapinlampi, George, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Testing for cointegration and EKC hypothesis of GDP, energy, and carbon emissions for China, USA and EU15 in years Research article to Be submitted to review LCO2 LGDP2 LCO2 LGDP3

11 EU 15: Summary of results Emissions and energy use are divergent Emissions and GDP develop in the opposite directions in the long-run Emissions and GDP squared: structural break at 2004 Emissions and GDP cubic: possible negative correlation Lapinlampi, George, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Testing for cointegration and EKC hypothesis of GDP, energy, and carbon emissions for China, USA and EU15 in years Research article to Be submitted to review.

12 Economic growth, energy economy and CO2 emissions: USA LCO2 LENE LCO2 LGDP Lapinlampi, George, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Testing for cointegration and EKC hypothesis of GDP, energy, and carbon emissions for China, USA and EU15 in years Research article to Be submitted to review

13 USA: Summary of results Emissions and energy use: significant convergence Emissions and GDP develop in the opposite directions in the long-run Emissions and GDP squared: structural break at 2004 Emissions and GDP cubic: possible negative correlation Lapinlampi, George, Kaivo-oja, Jari & Luukkanen, Jyrki (2014) Testing for cointegration and EKC hypothesis of GDP, energy, and carbon emissions for China, USA and EU15 in years Research article to Be submitted to review.

14 Statistical VAR Analysis of EU15, China and USA: Summary of key results A turning point year identified: In 2004 considerable policy change was observed in 2004 in the timeseries of EU-15 and USA Results of cointegrations tests: EU15: no cointegration, No long-run relations estimates in the current model, New setup needed to estimate long-run relations; USA: no cointegration: No longrun relations estimates in the current model: New setup needed to estimate long-run relations; China: Emissions can be explained by energy use at 1% level, the relation is positive; Emissions can t be explained by GDP; Emissions can be explained by GDP^2 at 1% level, the relation is negative; Emissions can be explained by GDP^3 at 1% level, the relation is negative; Cointegration is persistent: Nearly 95% of disequilibrium is corrected in one year Grangers test results: EU15: VAR(1) model, based on lag selection criteria; GDP^3 is Grangercausing emissions; At 1% level Possible support for N-curve hypothesis; Based on graphs, inverted N- relation: No statistically significant Granger causality between energy use and emissions, USA: VAR (2) model, based on lag selection criteria; GDP^3 is Granger-causing emissions At 5% level: Possible support for N-curve hypothesis: Based on graphs, inverted N-relation. Energy use is Granger-causing emissions At 1% level. China: VAR(1) model, based on lag selection criteria; Emissions are causing GDP: at 5% level; GDP squared: at 1% level; GDP cubic: at 1% level; Energy use is causing emissions at 5% level

15 Some critical insights of statistical analysis N-curve hypothesis? USA and EU-15 probably yes, EKC hypothesis? China probably yes Some problematic (but catalytic for futher research) results: EU-15: There is no Granger causality between energy use and emissions and why the paths are divergent? Why in the short-run emissions are not affected by GDP? USA: Other macroeconomic variables? Trade? China: Why the paths of emissions and GDP are divergent? Why there is a unilateral direction from emissions to all GDP variables? What about the volume of trade? Influental international trade effects: Probably internal trade of US and Chinese multinational corporations should be studied more in the context of global climate policy analysis

16 Comparative trend views: China, Euro area, EU and United States: CO2 emission per GDP and per capita Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manucript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

17 Using ChinaLINDA model to assess the impact of the economic structure on CO 2 emissions in China Source: Luukkanen, Jyrki, Panula-Ontto, Juha, Vehmas, Jarmo, Liyong, Liu, Kaivo-oja, Jari, Häyhä, Laura & Auffermann, Burkhard (2014) Structural change in Chinese economy: Impacts on energy use and CO 2 emissions in the period Technological Forecasting and Social Change. Forthcoming.

18 GT Comparative views: Electricity production from coal sources and CO2 emissions 9 CO2 emissions (Gt) China Euro area European Union United States Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

19 Comparative trend views: CO2 emissions and electricity production from coal sources Gt CO2 emissions (Gt) China Euro area European Union United States Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

20 Comparative views: Electricity production from renewable sources (excluding hydroelectric and not excluding hydroelectric) Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

21 Mtoe Comparative views: Energy use and electricity production 3000 Energy use (Mtoe) China Euro area European Union United States Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

22 Comparative trend views: CO2 emissions from different sectors Source: Jari Kaivo-oja & Vehmas, Jarmo (2014) Trend analysis of energy and climate policy environment: Comparative electricity production and consumption benchmark analyses of China, Euro area, European Union and United States. Manuscript in review process. Finland Futures Research Centre. Turku School of Economics, University of Turku.

23 Summary Research of the CHEC project confirms that the fast growth of GDP per capita remains the most important driver of increased energy consumption and greenhouse gas emissions in China. From the point of view of global climate emissions, China's role is extremely significant. While the efficiency improvements in China are huge, they have not kept up with the growth of affluence and consumption. The role of international trade in context climate change policy needs more empirical research. Economic development, the rise of a middle class, urbanization process and government policies drive towards a more service-oriented economic structure, which will reduce energy use and emissions in China in future. Obviously the Government of China has recognized the critical role of energy and resource trade. This political issue is very important for the European Union, too. However, even with very ambitious plans for development of renewable energy capacity, the changing economic structure can only be expected to limit the growth of CO2 emissions by less than 1/3 of what the growth would be with an economic structure dominated by heavy industry. The findings of CHEC project suggest that the planned investments in renewable energy production, while massive in scale, will not make it possible for China to curb the growth in emissions by More efficient interventions to consumption side would be required to meet the goals. A key strategic question for the EU and global community is: What is going to be the peak level of energy use in China in 2030?

24 Thank you! Research Director, Adjunct Professor, Dr Jari Kaivo-oja Finland Futures Research Centre, Turku School of Economics, University of Turku, Unit of Tampere, Yliopistonkatu 58 D, Tampere, Finland Tel (2) , GSM (41)