The Effect of the Kyoto Protocol on Carbon Emissions

Since 1997, CO₂ emissions have continued to rise in many countries despite their emission caps under the Kyoto Protocol (Kyoto). Failure to meet promised targets, however, does not imply that Kyoto has been pointless. Whether Kyoto has made a difference relative to the counterfactual of “No Kyoto” is an empirical question that requires an instrumental variables strategy. We argue that countries’ ratification of the statutes governing the International Criminal Court is a valid instrument for ratification of Kyoto commitments. In our panel fixed effects estimations, the instrument easily passes weak identification and overidentification tests. It can be plausibly excluded from our second‐stage equations and does not cause CO₂ emissions. Our estimates suggest that Kyoto ratification has a quantitatively large (about 10 percent) and robust, though only moderately statistically significant, negative effect on CO₂ emissions. We also show that higher fuel prices and a different energy mix in Kyoto countries support this result.     

An Indian story on carbon emission,energy consumption,trade openness,and financial development

This paper empirically studies the impact of energy consumption, financial development, and trade openness on India's carbon emission for 1971 to 2014 and validates the environmental Kuznets curve hypothesis for India. The Autoregressive Distributed‐lagged model (ARDL) bound test is used to test the existence of cointegration among the key variables. The results exhibit a U‐shaped relationship between carbon emission and energy consumption in the long run. Through this study, we find out the maximum threshold value of energy consumption per capita to 757 kg of oil equivalent, which is above the current consumptions levels—indicating a rise in carbon emission shortly. Further, the long‐run results show that a 1% increase in trade openness will decrease carbon emission by 0.11%, which is a display of technological effect over scale effect and composition effect. Financial development does not exhibit a significant relation to carbon emission. The results are in line with the literature on climate change in emerging countries. This empirical work gives some insight into policy issues that have to be looked into further.     

The determinants and interrelationship of carbon emissions and economic growth in African economies: Fresh insights from static and dynamic models

This study explores the interrelationship between CO₂ emissions and economic growth in selected Africa economies from 1990 to 2014 providing evidence from both static and dynamic models. Results show that increases in energy use have a significant and positive effect on economic growth; which goes to show that growth in Africa is actually energy dependent. Further findings suggest that CO₂ emissions have no significant contemporaneous effect, however, a significant and negative effect at a one‐period lag on economic growth. The significance of the impacts is consistently confirmed by both the static and dynamic estimations. Also, trade adds to economic growth and also contributes to environmental deterioration in Africa. There is a dire need for Africa to adjust its energy portfolio by shifting to clean energy sources which will enhance sustainable economic growth without deteriorating the environment.     

The impact of clean energy consumption on economic growth and CO2 emissions in BRICS countries: Does the environmental Kuznets curve exist?

This paper examines the impact of clean energy consumption (CEC) on economic growth (EG) and CO₂ emissions (CO₂) within a framework of environmental Kuznets curve (EKC) hypothesis in a panel of BRICS countries for the period 1992–2014. The results indicated that CEC and EG have a significant positive impact on EG, while CO₂ has a negative impact on it. Our results also found that EC and EG increase CO₂ while CEC significantly reduces it. Further, we found that the EKC hypothesis is valid in the BRICS countries. Finally, panel causality test indicated that unidirectional causality running from EC to EG. However, we did not find a causal relationship between CEC and EG. Based on these results, some of the policy implications have proposed for these emerging market economies.     

The empirical relationship between carbon emission and energy use of BRICS nations

In literature, there has been a large number of empirical research to examine the impact of CO2 emission on economic activity popularly known as the Environmental Kuznets curve having an inverted U shape relationship. The increasing environmental problem and environmental degradation are global phenomena due to increasing economic activities. In order to verify this relationship empirically in the context of BRICS nations, the present study intends to investigate the importance of energy use in the estimation of carbon emission while controlling GDP, industry value added and trade openness using Ordinary Least Square (OLS) and Fixed Effect (FE) Models. Our findings have confirmed that the relationship between CO2 emission and GDP confirmed inverted U‐shaped of the EKC. The direction of the relationship between squared LNIVA and LNCO2P further reinforce the inverted U‐shaped EKC. The relationship between LNEU and CO2P also satisfied the inverted U‐shape of the EKC. This may be due to the practice of energy efficiency and energy conservation measures in industrial sectors in BRICS nations. However, BRICS nations should also emphasize renewables and policies need to be aligned accordingly to keep CO2 emission at a lower level so that global warming could be kept to below 1.50°C, which is the target given by Paris Agreements.     

Policy attribute framing: A comparison between three policy instruments for personal emissions reduction

A comparative experiment in the UK examined people's willingness to change energy consumption behavior under three different policy framings: energy tax, carbon tax, and personal carbon allowances (PCA). PCA is a downstream cap‐and‐trade policy proposed in the UK, in which emission rights are allocated to individuals. We hypothesized that due to economic, pro‐environmental and mental accounting drivers PCA would have greater potential to deliver emissions reduction than taxation. Participants (n = 1,096) received one version of a survey with the same energy‐behavior–related questions and identical incurred costs under one of the following framings: energy tax (where carbon was not mentioned), carbon tax, and PCA. Results suggest that policies that draw people's attention to carbon (PCA and carbon taxation) could have greater impact on their stated willingness to reduce energy consumption, and on the reduction amounts prompted, than would a non‐overt price signal (energy tax). There is mixed evidence, however, as to whether PCA or carbon taxation would produce the largest energy demand reductions. Some indication was found for a spillover toward wider carbon conservation under the PCA framing. © 2011 by the Association for Public Policy Analysis and Management.     

Renewable Portfolio Standards and Policy Stringency: An Assessment of Implementation and Outcomes

This research examines the impact of increasing the stringency of renewable portfolio standards (RPS) on the consumption of energy produced from renewable sources. Putting prior findings in the context of policy learning, first we focus on technological innovation, factor endowments, and economic energy dependence of American states to track how RPS have proliferated and strengthened. Next, we look at the net effect of this RPS evolution on state fossil fuel energy divestment. To evaluate the interplay between: a) the political desire to lower fossil fuel use, b) technological feasibility to do so, and c) the economic trade‐offs and risks, we focus on the industrial sector dependence on energy security and affordability. Our results indicate that energy security is a priority and even in light of increasing RPS stringency, states with relatively weak but mandatory RPS are leaders in aggregate renewable energy consumption. This fact is due to favoring biofuel and hydro generation rather than solar and wind because of lower deployment costs.     

Impact of industrialization,urbanization, and financial development on energy consumption: Empirical evidence from India

This article examines the relationship between energy consumption, industrialization, urbanization, economic growth, and financial development in India from 1980 to 2017. The ARDL bound testing; Johansen & Juselius cointegration approach and Gregory & Hansen structural break cointegration technique confirm the long‐run relationship exists among variables. The result of long‐run analysis indicates that the industrialization, urbanization and economic growth play a vital role in increasing energy consumption in India. However, financial development indicates negative relation to energy consumption. The coefficient of error correction term is negative and statistically significant at 1% confidence level, it means last‐period's deviation from a long‐run equilibrium. It is clear from the results of Toda‐Yamamoto Causality, there is a unidirectional causality running from industrialization to energy consumption. However, there is bidirectional causality showing between energy consumption and urbanization, economic growth and energy consumption, and urbanization and Economic growth. Urbanization facilitates fuel switching, as decentralized rural energy sources like traditional wood‐burning are replaced by centralized energy sources. From the above findings, we argue that proper awareness should be made at the urban center regarding use of energy saving equipments and public infrastructure should be improved to harness the effect of urban agglomeration. As rapid development of energy intensive‐industries and economic activity in Indian economy, there is need of energy efficient technology in industry in order to reduce energy consumption.     

Environmental management amidst energy use,urbanization, trade openness,and deforestation: The Nigerian experience

This study empirically explores the linkage between urbanization and deforestation while controlling for the role of energy consumption, trade openness, and economic growth within recent data from 1971 to 2015. To do this, we employed the vector error correction‐Granger causality approach and Pesaran's autoregressive distributed lag cointegration technique. The Bayer–Hanck cointegration test establishes an equilibrium relationship among the variables. Results reveal that economic growth, energy consumption, and urbanization have a significant impact on deforestation in Nigeria, thereby reducing the quality of the environment. Short‐ and long‐run unidirectional casualty flows from urbanization to deforestation. Therefore, policies for reducing deforestation and enhancing environmental sustainability for growth and development were suggested.     

Debt,democratization, and development in Latin America: How policy can affect global warming

The environmental Kuznets curve (EKC) hypothesis conjectures a nonlinear relationship between pollution and economic growth, such that pollution per capita initially increases as countries economically develop, but then reaches a maximum point before ultimately declining. Much of the EKC literature has focused on testing this basic hypothesis and, in studies that find evidence of an EKC, estimating the “turning point” level of development at which the per capita pollution‐growth relationship changes sign. This approach has not emphasized the policy relevance of specification issues or the potential role of policy variables. This research explores a modified EKC specification which conditions the pollution‐growth relationship on a country's level of debt and degree of democratization. These variables turn out to be significant, implying that different political and economic contexts can shift EKCs and their turning points. These findings suggest that policies to relieve debt burdens and institute political reform, in addition to their usual justifications, also could be used as a strategy to reduce carbon emissions from developing countries. © 2008 by the Association for Public Policy Analysis and Management.     

EU Legislation to Reduce Carbon Emissions from Cars: Intergovernmental or Supranational Policy Making?

This article examines the making and implementation of the 2009 European Union (EU) regulation on cars and CO₂ emissions (Regulation [EC] No 443/2009). As the first legally binding measure to target the CO₂ emissions of passenger cars, this regulation represents a milestone in EU efforts to reduce the climate impacts of road transport. The analysis draws on two central theoretical perspectives on EU policy making: liberal intergovernmentalism and supranationalism. Both offer important insights, but their explanatory power varies with the policy‐making phase in focus. The analysis shows that the Commission and the car industry were instrumental in shaping what eventually became an industry‐friendly regulation applicable in all EU countries. However, far from being a case of closed negotiations between the industry and the Commission, Germany and other EU countries defending the interest of manufacturers of high‐emission vehicles made use of their powers during the decision‐making phase and succeeded in watering down the Commission's proposal.     

Investments in Global Warming Mitigation: The Case of “Activities Implemented Jointly”

This paper examines bilateral cooperation between developed countries (home country) and developing countries (host country) to reduce greenhouse gas emissions and to enhance carbon dioxide sinks. With the home-host country pair as the unit of analysis, our logistic regression model examines 158 Activities Implemented Jointly (AIJ) investment projects from 1993 until 2002 across 2541 country-pairs. Because the marginal costs of reducing emissions may be lower in developing countries, the AIJ projects served as a policy laboratory to assess whether such investments might be advantageous to both countries in the event future regimes allowed emission credits from such bilateral projects. Instead of investing in home countries where maximum pollution reductions (or carbon sequestration) might be possible, home countries invest in locations where they can conduct their policy experiments at low transaction costs. Prior trade and aid relationships were used as a proxy. Regarding energy projects, location decisions are driven by home countries’ desire to reduce air pollution that they receive from abroad. Geography – proximity of a host country to a home country – in interaction with host country's coal production, is a very important driver of location decision in AIJ energy sector projects. Location of sequestration projects is impacted by the host country's potential for avoiding deforestation as well as by previous aid and trade patterns between a home and a host country. Proximity is not important in this case.     

Nexus between carbon emission,financial development,and access to electricity: Incorporating the role of natural resources and population growth

This study explores the nexus between financial development, access to electricity, and CO₂ emissions in Pakistan over the period from 1990 to 2015, incorporating the role of natural resources and population growth. We checked the stationarity of the data by using three different unit root tests (ADF, Phillip Pesaran, and DG‐FLS). Long‐ and short‐run elasticities have been determined through auto‐regressive distributive lag (ARDL) method. The empirical results confirmed that financial development and access to electricity increase CO₂ emissions and deteriorate the environmental quality. In addition, the population growth is responsible for growing CO₂ emissions in Pakistan, while natural resources have insignificant relation with CO₂ emissions. Furthermore, bidirectional causality exists between population growth and natural resources, whereas unidirectional causality is detected among financial development and CO₂ emissions, natural resources and population growth, and financial development and population growth. The newly developed findings suggest helpful policy implications to adequately address the issue of CO₂ emissions without compromising economic development.     

Assessing the role of regulatory quality,favouritism, administrative requirement and licencing restriction in curtailing carbon emissions

The urgent need to achieve the Paris Agreement has compelled countries to set mitigation targets to curtail carbon emissions. Notwithstanding, stakeholders' effort to implement emission-reduction policies is often constrained by institutional challenges. This study provides new evidence about the dynamic relationship between institutional quality and carbon emissions in 63 industrialised economies. Using a reduced-form energy emission model and the system GMM technique, we exploit four institutional quality measures—favouritism, administrative requirement, licencing restriction and regulatory quality—and analyse their impact on carbon emissions. The results show that institutions play a fundamental role in mitigating carbon emissions. However, the abatement effect depends on the regulatory quality, the extent of favouritism, licencing restrictions and administrative requirements. Our findings reveal that stringent regulations such as licencing restrictions reduce carbon emissions in the short and long run. Administrative requirement such as emission reporting inhibits carbon emission in the short and long run, whereas favouritism worsens it. The results are robust to alternative model specifications. The findings from this study highlight the need for policymakers to pay close attention to favouritism, as it tends to reduce the effectiveness of emission policy regulations. Additionally, we argue for the need for stringent administrative requirements given its critical role in internalising carbon emission intensity in industrialised economies.     

Is the causal relation between foreign direct investment,trade, and economic growth complement or substitute? The case of African countries

This study examines causal nexus between foreign direct investment (FDI) and economic growth for 25 African countries within a model that also takes into consideration trade openness using more recent panel data set over the period 1980–2018. We used panel bootstrapping cointegration techniques that account for cross‐sectional dependence to test whether there is a long‐run cointegration relationship or not. The Granger causality approach is employed to conduct predictive analysis among the panel series. Our findings indicate the presence of a long‐run equilibrium nexus between the variables, and we found a bidirectional causality between foreign direct investment, trade openness, and economic growth. This study provides an insight for governments and policymakers in this region to restructure FDI and trade policies in such a way that its positive spillover would spread across the rural areas and local firms, thereby leading to an all‐inclusive sustainable economic growth and development of African countries in the long run.     

Compensation rules for climate policy in the electricity sector

Most previous cap and trade programs have distributed emission allowances for free to incumbent producers. However, in the electricity sector the value of CO₂ allowances may be far in excess of costs to industry and giving them away to firms diverts allowance value from other purposes. Using a detailed simulation model, this paper shows that compensation to firms losing asset value under a climate cap and trade policy can be achieved for a small fraction of total allowance value, if targeted carefully. However, the economic efficiency cost of providing incremental compensation to reach the fully compensated level is many multiples of that incremental compensation. These considerations might move policymakers away from free allocation of CO₂ emission allowances in the electricity sector. © 2008 by the Association for Public Policy Analysis and Management.     

The problem with the “portfolio approach” in American energy policy

One predominant theme in American energy and electricity policy is the idea of a “portfolio approach,” or that society must embrace an assortment of different energy technologies simultaneously. This article argues that such a strategy, in practice, is (a) biased, since fossil fuel and nuclear technologies have been heavily favored; (b) opaque, obscuring the different full social costs of energy systems; (c) inequitable, promoting technologies that contribute to climate change; and (d) unsophisticated, ignoring important qualitative differences among technologies. The article estimates the full social costs of electricity generation, concluding that the five cheapest forms of electricity generation are all renewable resources; that intermittency is not a reason to reject renewable energy technologies; that nuclear power has significant technical and environmental problems, especially from a greenhouse gas emissions and climate change perspective; and that “clean coal” and carbon capture and sequestration technologies face significant challenges to deployment.     

Covenant of Mayors: Reasons for Being an Environmentally and Energy Friendly Municipality

The Covenant of Mayors (CM) is the mainstream European movement involving local authorities who voluntarily commit to increase energy efficiency and the use of renewable energy sources within their territories with the aim of reducing CO₂ emissions and meet the European Union objectives by 2020. One country that has a greater number of signatories of this agreement is Spain. This article analyzes which factors influence the decision of Spanish local authorities to join the ever‐growing movement. An empirical model is formulated to describe the behavior of Spanish local governments, this being a binary choice model which is a function of various political, economic, and technical factors. Among the prominent factors that influence this decision are population, availability of renewable energy, fiscal and environmental stress, citizens’ political preference, the contagion effect of neighboring municipalities, the existence of covenant coordinators, and finally, economic motivations.     

The roadmap to net-zero emission: Do geopolitical risk and energy transition matter?

Global crises have heightened policy uncertainties and efforts to address global climate change. Limited evidence exists in the literature on geopolitical risk's direct and indirect roles in addressing global emissions. In this study, we examine whether geopolitical risk could impede or facilitate efforts to attain a net-zero emissions target through energy transition using panel data for 42 countries from 1990 to 2020. Various econometric techniques were applied in this study to present robust findings and reliable conclusions. Estimates from the Driscoll-Kraay, Lewbel two-stage least squares and method of moment regression techniques consistently showed that countries' geopolitical risk directly increases emissions (total greenhouse gas, carbon, methane, and nitrous oxide). At the same time, energy transition, measured with renewable energy consumption, mitigates these emissions. In addition, evidence from the partial linear functional-coefficient model technique indicates that renewable energy consumption consistently mitigates emissions when geopolitical is minimal (at a minimum and mean level). However, the role of renewable energy consumption in reducing emissions becomes weaker when geopolitical risk is heightened—thus, when geopolitical risk reaches its maximum level. We recommend that efforts to sustain renewable energy transition and maintain geopolitical stability are vital for achieving net-zero emissions and climate change mitigation.     

Modeling the macroeconomic determinants of environmental degradation in E-7 countries: The role of technological innovation and institutional quality

Environmental degradation poses a severe threat to life on earth. Similarly to other countries, emerging seven (E-7) countries have been struggling to decrease their dependence on non-renewable energy sources by adopting environment friendly technologies for reducing environmental deterioration and to achieve sustainable development goals (SDGs) of the United Nations. In present study, we reassessed the technological policies of E-7 countries, and addressed the issues of affordable and clean energy, institutional quality (IQU), and sustained economic growth (EGR) to address the problem of environmental deterioration. For this purpose, we have investigated the role of renewable energy consumption (REC), technological innovations (TINs), IQU, and EGR on CO₂ emissions (CE) by using the panel quantile regression (PQR) for the period from 1996 to 2020. The empirical outcomes of FGLS reveal that a 1% increase in REC, TIN, and IQU reduces the CE by 0.145%, 0.233%, and 0.249%, while a 1% rise in EGR and population (POPU) raises the CE by 0.993% and 1.546% respectively. Similarly, the results of PQR demonstrate that REC, TIN, and IQU reduce CE, whereas EGR and POPU increase environmental degradation. The impact of TIN on CE is high at lower quantiles and low at higher quantiles. The impact of IQU on CE is low at lower quantiles and high at higher quantiles Based on these findings, we have recommended a comprehensive SDG-oriented policy framework, so that E-7 countries can make progress towards achieving the objectives of SDG 16, SDG 13, SDG 7, SDG 8, and SDG 9.