• Energy Research
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Abstract We present a production-theoretical approach to decomposing the change of aggregate CO2 emissions over time using the Shephard input distance functions and the environmental data envelopment analysis (DEA) technology in production theory. Application of the proposed approach requires only some aggregate data and the change of aggregate CO2 emissions can be decomposed into contributions from seven factors. These contributions are obtained through solving a series of DEA models. The key features of the proposed approach are the use of panel data to estimate the production frontier and the inclusion of several production technology related components. Using the proposed approach, we present two application studies on decomposing the CO2 emissions for world regions and OECD countries. A comparison between the proposed approach and other decomposition analysis methods is also presented.

Abstract The transition of energy structure to renewable energy is a social and systematic engineering that requires complex regional power interconnection as a support. Thus, an assessment of the economic viability of infrastructure investments for supporting such transmission expansion is crucial. This study presents a multi-regional power system optimization model to evaluate the potential economic benefits of infrastructure investments for the national inter-regional electricity network in China under various scenarios in the context of low-carbon transformation. Key factors influencing economic benefits are analyzed specifically and regulation barriers associated with inter-regional electricity trade are given particular attention. The results show that approximately 140 Giga Watt (GW) of infrastructure construction for the inter-regional electricity trade network is economically viable during the planning horizon. These new interconnections would lead to 250–440 billion RMB of economic benefits. Regional electricity trade barriers caused by imperfect market mechanisms have a negative impact on the economic benefits of transmission infrastructure investments, although they promote scale and utilization efficiency in the power sector of electricity-importing regions. Improving the national grid coordination mechanism to break the grid isolation between the State Grid Corporation of China and the China Southern Power Grid is crucial, because a large number of transmission lines connecting these two national-level power grids are economically viable.

Abstract This paper reports meta-regressions of substitution elasticities between greenhouse gas (GHG) polluting and nonpolluting inputs in agricultural production, which is the main feedstock source for biofuel in the U.S. We treat energy, fertilizer, and manure collectively as the “polluting input” and labor, land, and capital as nonpolluting inputs. We estimate meta-regressions for samples of Morishima substitution elasticities for labor, land, and capital vs. the polluting input. Much of the heterogeneity of Morishima elasticities can be explained by type of primal or dual function, functional form, type and observational level of data, input categories, number of outputs, type of output, time period, and country categories. Each estimated long-run elasticity for the reference case, which is most relevant for assessing GHG emissions through life-cycle analysis, is greater than 1.0 and significantly different from zero. Most predicted long-run elasticities remain significantly different from zero at the data means. These findings imply that life-cycle analysis based on fixed proportion production functions could provide grossly inaccurate measures of GHG of biofuel.

Abstract Under the scheme of the Kyoto Protocol, there are plans for the efficient reduction of carbon dioxide emissions. In the electric power sector, nuclear power generation, which emits no carbon dioxide in the process of generating electricity, has come under scrutiny. However, this energy produces a new environmental issue: the disposal of radioactive waste. First, we derive shadow prices of carbon dioxide and low-level waste as marginal abatement costs in the case of the electric power sector in Japan, employing a directional output distance function. It is found that the shadow prices are US$39 per tonne for carbon dioxide and US$1531 per liter for low-level waste. Secondly, we calculate the indirect Morishima elasticity between carbon dioxide and low-level waste in order to identify their substitutability, and it is found that the substitution of low-level waste for carbon dioxide is easier than the reverse. This result suggests that, with the amount of generated electricity fixed, carbon dioxide can be substituted more easily by low-level waste when the relative price of carbon dioxide increases, for example, as a result of implementation of a carbon dioxide tax or an emissions trading system.

Abstract Green Total Factor Productivity (GTFP) is a critical indicator for measuring the development and transformation of green economy, with profound implication for achieving a win-win situation of conserving energy, reducing emissions, and developing economy. The promotion of GTFP cannot be separated from the financial support and guarantee provided by financial agglomeration. According to the theory of new economic geography and agglomeration, this study uses location entropy and directional SBM-DEA methods to calculate the financial agglomeration level and GTFP of 283 cities at prefecture-level and above in China from 2003 to 2018. A temporal and individual two-way fixed-effect model and a spatial measurement model are constructed to empirically study direct and spillover impacts of financial agglomeration on GTFP. The empirical results show that financial agglomeration facilitates GTFP growth in a given city, but it significantly reduces GTFP in surrounding areas of the city. Divided the cities by their geolocations in eastern, central, and western regions, we find that, in each region, financial agglomeration can significantly promote GTFP of a city but does not have a significant impact on its surrounding areas, indicating a weak spillover effect. Cities with a population of less than 3 million are associated with higher GTFP. Industrial structure, foreign direct investment and human capital play a positive role in GTFP growth, but the role of urban infrastructure construction appears trivial.

Abstract Cap-and-trade programs are designed to minimize the overall cost of pollution control by effectively allowing firms with low abatement costs to reduce emissions on behalf of those with higher abatement costs. However, these trades redistribute where emissions are generated, which has important implications for welfare because many pollutants have differential environmental and health impacts depending on where they are emitted. This paper compiles and analyzes a national data set of power plant emissions in order to assess how the Regional Greenhouse Gas Initiative (RGGI), a carbon dioxide (CO2) cap-and-trade program involving nine states in the United States, impacts the emissions and damages from copollutants. Our results suggest that, in addition to achieving its goal of reducing CO2, the program has lowered the quantity of sulfur dioxide (SO2) emissions as well as associated damages in the policy region. However, two factors diminish the overall benefits from the program. First, within the RGGI region, trading shifts electricity generation to locations with higher marginal damages for SO2. Second, there is leakage of electricity generation and emissions to nearby states, although this latter effect is more modest than ex ante analyses predicted.

Abstract The reduction in energy-related manufacturing carbon dioxide emissions for nine OECD countries for 1973–87 is analysed. Carbon dioxide emissions are estimated from energy use data. The emphasis is on carbon dioxide intensities, defined as emissions divided by value added. The overall manufacturing carbon dioxide intensity was reduced by 42% in the period. Four fuels are specified together with six subsectors of manufacturing. A Divisia index approach is used to evaluate the contribution to reduced carbon dioxide intensity from different components. The main contribution to reduced carbon dioxide intensity is from the general reduction in manufacturing energy intensity, most likely driven by economic growth and increased energy prices, giving incentives to invest in new technology and industrial processes. There is also a significant contribution from reduced production in the most carbon dioxide intensive subsectors, and a contribution from higher efficiency in electricity generation together with a larger nuclear power share at the expense of oil.

We assess the effect of the COVID-19 pandemic on global fossil fuel consumption and CO2 emissions over the two-year horizon 2020Q1-2021Q4. We apply a global vector autoregressive (GVAR) model, which captures complex spatial-temporal interdependencies across countries associated with the international propagation of economic impact due to the virus spread. The model makes use of a unique quarterly data set of coal, natural gas, and oil consumption, output, exchange rates and equity prices, including global fossil fuel prices for 32 major CO2 emitting countries spanning the period 1984Q1-2019Q4. We produce forecasts of coal, natural gas and oil consumption, conditional on GDP growth scenarios based on alternative IMF World Economic Outlook forecasts that were made before and after the outbreak. We also simulate the effect of a relative price change in fossil fuels, due to global scale carbon pricing, on consumption and output. Our results predict fossil fuel consumption and CO2 emissions to return to their pre-crisis levels, and even exceed them, within the two-year horizon despite the large reductions in the first quarter following the outbreak. Our forecasts anticipate more robust growth for emerging than for advanced economies. The model predicts recovery to the pre-crisis levels even if another wave of pandemic occurs within a year. Our counterfactual carbon pricing scenario indicates that an increase in coal prices is expected to have a smaller impact on GDP than on fossil fuel consumption. Thus, the COVID-19 pandemic would not provide countries with a strong reason to delay climate change mitigation efforts.