Modelling the International Diffusion of Carbon Intensity Reducing - - PowerPoint PPT Presentation

Modelling the International Diffusion of Carbon Intensity Reducing Technology

David I. Stern Australian National University E-mail: sterndavidi@yahoo.com

The Environmental Kuznets Curve Model EKC: inverted-U relation between income and emissions or impact: ln(E/P)it = αi + γt + β1 ln(GDP/P)it + β2 (ln(GDP/P))2it + εit

Environmental Kuznets Curve

50 100 150 200 250 300 5000 10000 15000 20000 25000 30000

$ GNP per Capita

(Source: Panayotou, 1993)

• 0.3
• 0.2
• 0.1

0.1 0.2 0.3 1960 1965 1970 1975 1980 1985 1990 World OECD Non-OECD

Figure 4. Time effects: first differences sulfur EKC. Source: Stern and Common (2001).

Developing an Alternative Approach

Sulfur Emissions Frontier Model Frontier model:

f (Eit,yit,xit,At,g) = dit

g

Emissions distance function (Cobb-Douglas-Linear):

ln Eit = lndit

E + ln At E +

j ln y jit

j

• + sln(

kxkit

k

• ) + uit

lndit

E 1

j = 0

• k =1

Results from Previous Studies

Energy Intensity

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Kilograms of Oil Equivalent per $

Canada Mexico USA

Carbon Intensity

0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Kilograms of Carbon per $

Canada Mexico USA

Energy Technology Trends

0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.1 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Canada Mexico USA

State Variable (A+d)

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999

Australia Austria Belgium Denmark Finland France Germany Greece Italy Japan Netherlands Portugal Spain UK USA

China: Commercial Energy Intensity 1980-2003

4.7 4.9 5.1 5.3 5.5 5.7 5.9 6.1

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Logarithm of Energy Intensity

China: Simplified Decomposition of Energy Intensity Change 1980-2003

• 120
• 100
• 80
• 60
• 40
• 20

20 40 60 1980-1985 1985-1988 1988-1989 1989-1990 1990-1995 1995-2000 2000-2003 GSCE/RMB △Itec △Istrs △Istri △Itot

Exploring the Preference Side

Table 3

Correlation Matrix lnDISTANCE lnSTATE lnGDP/P lnGDP lnP/A lnS*/A lnDISTANCE 1.000 lnSTATE 0.751 1.000 lnGDP/P 0.059 –0.363 1.000 lnGDP 0.406 0.262 0.456 1.000 lnP/A –0.213 –0.216 –0.088 0.136 1.000 lnS*/A –0.308 –0.287 –0.016 –0.011 0.942 1.000

Goals for EERH Project

Modeling Energy and Carbon Technology Trends:

• Include China & India
• Add more recent data
• Improve dynamic specification

Modeling Technology Choice:

• Review alternative theories
• Test on estimated trends

Integrating the Models:

• Embed the models in a growth/projection framework – e.g. Green Solow Model.