Environment, Energy and Environmental Productivity of Energy: A Decomposition Analysis in China and the US

Mohamad Taghvaee, Vahid and Hajiani, Parviz (2016): Environment, Energy and Environmental Productivity of Energy: A Decomposition Analysis in China and the US. Published in:

Abstract

The global warming, if not global burning, is a dire warning about environmental pollution dangers to everyone, living on the only one Earth. This study aims to measure relative contributors to the environmental quality changes during 2002-2011 using Logarithmic Mean Divisia Index in China and the US. Since these countries are the biggest polluters in the world, the decomposition technique is used to cut their wide environmental issues into the tiny bits of problems, being easy to cope with. Moreover, we employed Environmental Performance Index (EPI) to evolve the concept of Environmental Productivity of Energy (EPE). The results suggest that economic growth and income equality are environmentally-friendly while energy consumption is environmentally-unfriendly; and the Environmental Productivity of Energy (EPE) and technology progress are environmentally-moody (with various effects on environment). Consequently, the policy makers are advised to develop those economic sectors which are independent of pollutant energies; to replace the black energies by the green ones; and to invest on the research about the products whose demand is price inelastic.

• Item Type: MPRA Paper
• Language: English
• Keywords: Environment, Energy, Productivity, Decomposition
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics

References

Ajmi, A. N., Hammoudeh, S., Nguyen, D. K., Sato, J. R., 2015, On the relationships between CO2 emissions, energy consumption and income: the importance of time variation, Energy Economics, DIO: 10.1016/j.eneco.2015.02.007

Ang, B.W., Liu, F.L., 2001. A new energy decomposition method: perfect in decomposition and consistent in aggregation, Energy, 26 (6), 537–548.

Ang, B.W., 2004, Decomposition analysis for policy making in energy: which is the preferred method, Energy Policy, 32 (9), 1131–1139.

Ang, B.W., 2005, The LMDI approach to decomposition analysis: a practical guide, Energy Policy, 33, 867–871.

Atici, C., 2012, Carbon emissions, trade liberalization, and the Japan-ASEAN interaction: A group-wise examination, Journal of The Japanese and International Economies, 26, 167-178.

Baranzini, A., Weber, S., 2013, Elasticities of Gasoline Demand in Switzerland, Energy Policy, 63, 674- 680. DIO: http://dx.doi.org/10.1016/j.enpol.2013.08.084

Bhattacharyya, S.C., 2011, Energy Economics: concepts, issues, markets and governance, Springer, chapter 3, ISBN: 978-0-85729-267-4.

Dahl, C.A., 2012, Measuring global gasoline and diesel price and income elasticities, Energy Policy, 41, 2- 13. DIO: http://dx.doi.org/10.1016/j.enpol.2010.11.055

Divisia, F., 1925, L'indice Monetaire et la Theorie de la Monnaie. Rev, Econ. Polit, 39 (5), 980–1020.

Freitas, L.C. de., Kaneko, S., 2011, Decomposing the decoupling of CO2 emissions and economic growth in Brazil, Ecological Economics, 70, 1459–1469.

Grossman, G. M., Krueger, A. B., 1991, Environmental impact of a North American Free Trade Agreement, Working Paper 3914, National Bureau of Economic Research, Cambridge, MA.

Hettige, H., Muthukumara, M., Wheeler, D., 2000, “Industrial Pollution in Economic Development: the Environmental Kuznets Curve Revisited”, Journal of development economics, 62, 445-467.

Kasman, A., Duman Y. S., 2015, CO2 emissions, economic growth, energy consumption, trade, and urbanization in new EU member and candidate countries: A panel data analysis, Economic Modelling, 44, 97-103.

Kaya, Y., 1990. Impact of carbon dioxide emission control on GNP growth: interpretation of proposed scenarios. Paper presented to the IPCC Energy and Industry Subgroup, Response Strategies Working Group, Paris. (mimeo).

Laspeyers, E., 1871, Die Berechnung einer mittleren Waarenpreissteigerung. Jahrb, National, Stat, 16, 296- 315.

Leontief, W., 1941, The Structure of American Economy, 1919–1929:An Empirical Application of Equilibrium Analysis. Harvard University Press, Cambridge.

Leontief, W., 1970, Environmental repercussions and the economic structure: an input-output approach, The Review of Economics and Statistics, 52 (3), 262–271.

Leontief, W., Ford, D., 1972, Air pollution and the economic structure empirical results of input-output computations in: Brody, A., Carter, AP (Eds.), Input– Output Techniques, North-Holland, Amsterdam.

Leontief, W., Quantitative, 1936, Input and output relations in the economic system of the United States, Review of Economic Statistics, 18 (3), 105–125.

Lermit, J., Jollands, N., 2001, Monitoring energy efficiency performance in New Zealand: a conceptual and methodological framework, National Energy Efficiency and Conservation Authority Wellington. Available at: http://www.energywise.co.nz/Strategy/Documents/Monitoring%201.pdf.

Li, F., Song Z., Liu, W., 2014, China’s energy consumption under the global economic crisis: Decomposition and sectoral analysis, Energy Policy, 64, 193-202.

Ma, C., Stern, D.I., 2008, Biomass and China’s carbon emissions: A missing piece of carbon decomposition, Energy Policy, 36, 2517– 2526. ODYSSEE, 1999, Aggregate energy efficiency indicators in ODYSSEE for industry. Available at: http://www.odyssee-indicators.org/Publication/PDF/indic-ind.pdf.

Okushimia, S., Tamura, M., 2011, Identifying the sources of energy use change: Multiple calibration decomposition analysis and structural decomposition analysis, Structural Change and Economic Dynamics, 22(4), 313-326.

Paasche, H., 1874, Über Die Preisentwicklung der letzten Jahre nach den Hamburger Börsennotirungen, Jahrb National. Stat. 23, 168-178.

Ren, S., Yin, H., Chen, X.H., 2014, Using LMDI to analyze the decoupling of carbon dioxide emissions by China’s manufacturing industry, Environmental Development, 9, 61-75.

Report of the Intergovernmental Panel on Climate Change (IPCC) Yokohama, Japan,(2014)

Stern, D.I., 2004, The rise and fall of the environmental Kuznets curve, World Development, 2(8), 1419- 1439.

Taghvaee, V.M., Hajiani P., 2014, Price and Income Elasticities of Gasoline Demand in Iran: Using Static, ECM, and Dynamic Models in Short, Intermediate, and Long Run, Modern Economy, 5, 939-950.

Taghvaee, V.M., Parsa H., 2015, Economic growth and environmental pollution in Iran: Evidence from manufacturing and services sectors, journal: Custos E Agronecio Online, 11(1), 115-127.

Taghvaee, V.M., Shirazi, J.K., 2014, Analysis of the relationship between economic growth and environmental pollution in Iran (evidence from three sections of land, water and atmosphere). Indian Journal of Scientific Research, 7(1), 31-42.

Tsurumi, T., Managi, S., 2010, Does energy substitution affect carbon dioxide emissions – Income relationship?, Journal of The Japanese and International Economies, 24, 540-551.

US Energy Information Administration, Statistics, 2015. Available at: www.eia.gov

US Energy Information Administration, Key World Energy Statistics, 2014

Vaninsky, A., 2014, Factorial decomposition of CO2 emissions: a generalized Divisia index approach, Energy Economics, 45, 389-400.

Wade, S.H., 2002, Measuring change in energy efficiency for the annual energy outlook 2002, Energy Information Administration, Department of Energy, United States, Washington, DC. Available at: http://www.eia.doe.gov/oiaf/analysispaper/efficiency/pdf/efficiency.pdf.

World Bank, (2014), World Development Indicator. Available at: http://databank.worldbank.org/data/views/variableselection/selectvariables.aspx?source=worlddevelopment-indicators.

Xu, J.H., Fleiter, T., Eichhammer, W., Fan, Y., 2012, Energy consumption an CO2 emissions in China’s cement industry: a perspective from LMDI decomposition analysis, Energy Policy, 50, 821-832.

Yale University Database, Environmental Performance Index. Available at: http://epi.yale.edu/

Zhang, H., Lahr, M.L., 2014, China’s energy consumption change from 1987 to 2007: a multi-regional structural decomposition analysis, Energy Policy, 67, 682-693.