The Importance of Consumption-Based Accounting in a Potential Trade-Carbon Nexus Literature. Brantley Liddle Energy Studies Institute, NUS

Transcription

1 The Importance of Consumption-Based Accounting in a Potential Trade-Carbon Nexus Literature Brantley Liddle Energy Studies Institute, NUS

2 Motivation Long been concern that wealthy countries lower emissions via trade Recent consumption-based carbon emissions database by Peters et al. Economics trade-emissions papers use conventional, territory-based data Only two papers compare territory-based to consumption-based regressions Knight & Schor (2014) Lamb et al. (2014)

3 Motivation: Exponential Growth & Nexus/Cointegration Science Direct Article Counts EKC or energy Granger causality EKC or energy Granger causality AND nexus/cointegration

4 Outline Descriptive/graphical analysis Peters et al. consumption-based emissions data: 117 countries, CDIAC & UNFCCC territory-based emissions data Ratio consumption-based emissions: trade-based emissions Net exports of emissions Regression analysis Dependent variables: consumption-based emissions vs. territory-based emissions Independent variables: GDP per capita, trade shares, energy structure, energy prices

5 Ratio of Consumption-based to Territorybased Emissions 28 (out of 117) countries had mean ratio (over ) of less than one 12 countries fuel exports at least 75% of total exports Average country mean ratio 1.26 Mean ratio for each year ranged Most countries max & min yearly ratio was within 20-30% of their mean

6 Ratio of Consumption-based to Territory-based Emissions vs Average GDP per capita R² = Average GDP per capita (natural log)

7 Ratio of Consumption-based to Territory-based Emissions vs Average GDP per capita R² = Average GDP per capita (natural log)

8 Ratio of Consumption-based to Territory-based Emissions vs Average Imports to Exports Ratio y = e x R² = Average Imports to Exports Ratio

9 Ratio of Consumption-based to Territory-based Emissions vs Average Imports to Exports Ratio y = e x R² = Average Imports to Exports Ratio

10 Share of Net Global Carbon Emissions Flows China Russia India South Africa Ukraine

11 Share of Net Global Carbon Emissions Flows China Russia India South Africa Ukraine

12 Additional Variables World Bank Development Indicators; 102 Countries, Real GDP per capita Fossil fuel energy consumption as share of total energy consumption Industry value added, trade, exports of goods and services, imports of goods and services, all as % of GDP International Energy Agency; 29 & 33 OECD countries Real index of energy prices for industry & households Real index of oil products prices for industry & households IEA & Asia Development Bank; 48 OECD & Non-OECD countries Real index of gasoline prices

13 Pesaran CD Test & Absolute Value Mean Correlation Coefficient LN Consumption-based 0.42** LN Territory-based 0.51** LN GDP pc 0.82** LN Fossil fuel share 0.52* LN Industry share 0.45** LN Trade share 0.48** LN Exports share 0.46** LN Imports share 0.46** LN Total energy price index 0.86** LN Oil price index 0.79**

14 Methods Common correlated effects mean group estimator (CMG) Heterogeneous Robust to Nonstationarity, cointegration, breaks, serial correlation Addresses cross-sectional correlation Adds cross-sectional averages of dependent & independent variables

15 Trade & Carbon Emissions: Expectations Fossil fuels share & prices more important for Territory-based emissions Exports, imports & trade more important for Consumption-based emissions GDP per capita & industry share not clear

16 Trade & Carbon Emissions Dependent variable Territory-based Consumption-based GDP p.c. 0.57*** [ ] Trade share 0.01 [ ] Industry share 0.03 [ ] Fossil fuels share 1.25*** [ ] 0.66*** [ ] -0.17*** [ ] 0.06 [ ] 0.76*** [ ] Obs x-sects CD (p) 2.8 (0.01) 4.3 (0.00)

17 Trade & Carbon Emissions Dependent variable Territory-based Consumption-based GDP p.c. 0.51*** [ ] Exports share 0.03 [ ] Imports share [ ] Fossil fuels share 1.35*** [ ] 0.53*** [ ] -0.32*** [ ] 0.20*** [ ] 0.76*** [ ] Obs x-sects CD (p) 2.2 (0.03) 4.6 (0.00)

18 Trade & Carbon Emissions: OECD & Non- OECD Panels Dependent Territory-based variable GDP p.c. 0.42*** [ ] Fossil fuels 1.28*** share [ ] Exports share 0.01 [ ] Imports share [ ] OECD Consumptionbased 0.57*** [ ] 0.52** [ ] -0.24*** [ ] 0.14* [ ] Territory-based 0.57*** [ ] 1.21*** [ ] 0.02 [ ] [ ] Non-OECD Consumptionbased 0.64*** [ ] 0.70*** [ ] -0.33*** [ ] 0.22*** [ ] Obs x-sects CD (p) 0.4 (0.66) 2.0 (0.04) 0.3 (0.74) 0.5 (0.60)

19 Trade & Carbon Emissions: Energy Prices Dependent Territory-based variable GDP p.c. 0.44**** [ ] Fossil fuels 1.35**** share [ ] Exports share 0.01 [ ] Imports share [ ] Price [ ] Energy Price Index Consumptionbased 0.84**** [ ] 0.68**** [ ] -0.30**** [ ] 0.19*** [ ] 0.08 [ ] Territory-based 0.37**** [ ] 1.39**** [ ] 0.01 [ ] 0.02 [ ] -0.09* [ ] Oil Price Index Consumptionbased 0.50**** [ ] 0.54*** [ ] -0.29*** [ ] 0.16 [ ] [ ] Obs x-sects CD (p) -1.7 (0.10) 2.8 (0.00) 0.6 (0.54) 1.6 (0.12)

20 Trade & Carbon Emissions: Energy Prices Dependent Territory-based variable GDP p.c. 0.44**** [ ] Fossil fuels 1.35**** share [ ] Exports share 0.01 [ ] Imports share [ ] Price [ ] Energy Price Index Consumptionbased 0.84**** [ ] 0.68**** [ ] -0.30**** [ ] 0.19*** [ ] 0.08 [ ] Territory-based 0.37**** [ ] 1.39**** [ ] 0.01 [ ] 0.02 [ ] -0.09* [ ] Oil Price Index Consumptionbased 0.50**** [ ] 0.54*** [ ] -0.29*** [ ] 0.16 [ ] [ ] Obs x-sects CD (p) -1.7 (0.10) 2.8 (0.00) 0.6 (0.54) 1.6 (0.12)

21 Trade & Carbon Emissions: Gasoline Price Dependent Territory-based variable GDP p.c. 0.48**** [ ] Fossil fuels 1.29**** share [ ] Exports share 0.03 [ ] Imports share [ ] Price -0.07** [ ] Obs x-sects CD (p) OECD & Non-OECD OECD Consumptionbased 0.59**** [ ] 0.82**** [ ] -0.26**** [ ] 0.18*** [ ] [ ] Territory-based 0.41**** [ ] 1.37**** [ ] 0.03 [ ] [ ] -0.10** [ ] Consumptionbased 0.44**** [ ] 0.68*** [ ] -0.26**** [ ] 0.21*** [ ] [ ] (0.00) 3.5(0.00) 1.3(0.18) 2.0(0.04)

22 Trade & Carbon Emissions: Gasoline Price Dependent Territory-based variable GDP p.c. 0.48**** [ ] Fossil fuels 1.29**** share [ ] Exports share 0.03 [ ] Imports share [ ] Price -0.07** [ ] Obs x-sects CD (p) OECD & Non-OECD OECD Consumptionbased 0.59**** [ ] 0.82**** [ ] -0.26**** [ ] 0.18*** [ ] [ ] Territory-based 0.41**** [ ] 1.37**** [ ] 0.03 [ ] [ ] -0.10** [ ] Consumptionbased 0.44**** [ ] 0.68*** [ ] -0.26**** [ ] 0.21*** [ ] [ ] (0.00) 3.5(0.00) 1.3(0.18) 2.0(0.04)

23 Conclusions Most countries net importers of carbon emissions Low- & high-income countries have largest ratios, most middle-income countries have ratio > 1 China & India particularly important in global flow of emissions Function of size & carbon intensity; rather than energy intensity of exports Trade important for consumption-based emissions, but not territorybased Exports & imports impact emissions in opposite direction Domestic factors like carbon intensity of energy & energy prices matter for territory-based emissions

24 USAEE Working Paper

25 GDP p.c. elasticity GDP Nonlinearities: Territory-based Emissions y = x x R² = Average GDP p.c. (natural logs)

26 GDP p.c. elasticity GDP Nonlinearities: Consumption-based Emissions y = x x R² = Average GDP p.c. (natural logs)