A Comparative Study on World-Wide Carbon Emission Convergence: An Empirical Analysis

A Comparative Study on World-Wide Carbon Emission Convergence: An Empirical Analysis

Chhanda Mandal (Muralidhar Girls College, India) and Anita Chattopadhyay Gupta (Deshbandhu College for Girls, India)
DOI: 10.4018/978-1-5225-0215-9.ch019
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Abstract

Environmental issue is one of the primary concerns in present global scenario for developed as well as developing countries and reducing the emission level of greenhouse gases is the common objective for all. Study of per capita carbon emission convergence is quite significant in the ongoing debate of climate change policy formulation and implementation as future emission level can only decide the incentive to shift to the clean technology. With a balanced panel of 79 countries and 50 years, over 1960-2009, we have tested for both sigma and beta convergence. The data exhibits a possible convergence in carbon emission. The countries are disaggregated twice, first into OECD and Non-OECD countries and then into five categories on the basis of income. OECD countries show absolute and conditional beta convergence, also with sigma convergence. Countries from lower income group have a lower degree of variability in dispersion in the time period being considered. The set of explanatory variables in this analysis are real GDP per capita, population growth rate and trade openness.
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Introduction

Climate change is a serious and urgent issue. The Earth’s climate is changing, and the scientific consensus is not only that human activities have contributed to it significantly, but that the change is far more rapid and dangerous than thought earlier (IPCC 2007). The main factor in anthropogenic climate change is the increase in the concentration of carbon in the atmosphere over time. This increased concentration has been caused by the emission of GHGs as a result of economic activities, including energy, industry, transport, and land use, many of which rely upon fossil fuels. The most important GHG, carbon dioxide (CO2), currently constitutes 77 per cent of the global warming potential. Other contributors are methane (from agricultural sources), and land use change such as deforestation. Concentration level has increased because emissions during the last two centuries were in excess of what could be absorbed, and the excess GHGs began to accumulate in the atmosphere. The concentration of CO2 alone has increased by some 100 ppm over this period. Current global emissions contribute another 2-3 ppm of carbon dioxide equivalent (CO2) GHGs per year. Hence, climate change has become a significant and complex challenge to policy makers. Economic analysis is crucial to the climate policy debate. Continued research into climate change and appropriate policy action is necessary if governments are going to adopt an efficient and effective response. Contraction and Convergence (C&C) is a proposed global framework for reducing greenhouse gas emissions to combat climate change. Conceived by the Global Commons Institute [GCI] in the early 1990s, the Contraction and Convergence strategy consists of reducing overall emissions of greenhouse gases to a safe level (contraction), resulting from every country bringing its emissions per capita to a level which is equal for all countries (convergence). It is intended to form the basis of an international agreement which will reduce carbon dioxide emissions to avoid dangerous climate change, carbon dioxide being the gas that is primarily responsible for changes in the greenhouse effect on Earth. It is expressed as a simple mathematical formula. This formula can be used as a way for the world to stabilize carbon levels at any level. Advocates of Contraction and Convergence stress that negotiations at the United Nations Framework Convention on Climate Change [UNFCCC] are governed sequentially by the 'objective' of the UNFCCC [safe and stable GHG concentration in the global atmosphere] followed by its organising principles ['precaution' and 'equity']. C&C is widely cited and supported.

Key Terms in this Chapter

Contraction and Convergence: The Contraction and Convergence(C&C) approach was developed by the Global Commons Institute (GCI), an organization based in the UK, to deter the devastating CO 2 emission trends that are developing. With a long-term perspective on the distribution of rights and duties and their evolution over time, the C&C approach pursues the reduction of global CO2 emissions substantially (contraction) as well as the gradual equalisation of per capita CO2 emissions across countries (convergence). All parties participate in the emission-control regime (in the post-Kyoto period), with per capita emission permits converging to equal per capita levels over time. Under the C&C approach, all countries would collectively agree on a target for a stable CO 2 concentration in the atmosphere, to be reviewed annually, and then work out the rate at which current emissions must contract in order to reach this target.

ß-Convergence: Beta-convergence (ß-convergence), indicates that countries with lower initial levels of pollution per capita should experience higher pollution growth, and therefore eventually ‘catch-up’ with the most polluting countries. The terms conditional and unconditional (absolute) refer to whether convergence takes place after controlling or not for country-specific characteristics, which can determine differences in steady state emission levels.

Carbon Dioxide Emissions: The increase in energy consumption for various economic activities results in an increasing amount of gases that cause a greenhouse effect in the atmosphere, which ends up increasing global warming. The major gas causing the greenhouse effect in the atmosphere is carbon dioxide (CO 2 ), which is emitted through the use of fossil fuels such as petroleum, coal, and natural gas. It contributes more than 70% of atmospheric concentration and also has the longest life cycle with an atmospheric lifetime of almost 200 years. Therefore, analysing the determinants of CO 2 emissions and presenting forecasts for its potential evolution in the medium and long term is very much crucial for sustainable growth.

s- Convergence: In the field of environmental economics, s-convergence holds when the dispersion in environmental indicators diminishes over time. Barro and Sala-i Martin show that s-convergence is a necessary but not sufficient condition for the cross-section variance to decrease over time. It should be noted that s-convergence may fail to capture polarization phenomena in case of tendencies toward multimodality.

Greenhouse Gases: Gases that trap heat in the atmosphere are called greenhouse gases (GHGs). Water vapor(H 2 O),carbon dioxide (CO 2 ), methane(CH 4 ),nitrous oxide (N 2 O) and ozone are the main GHGs in earth’s atmosphere. When present in the atmosphere, these gases trap radiation in the form of heat, causing a warming process called the greenhouse effect.

EKC: The inverted U-shaped relationship between per capita income and environmental degradation is known as Environmental Kuznets Curve (EKC), named after the famous Kuznets Curve where Simon Kuznets (1955) AU52: The in-text citation "Simon Kuznets (1955)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. has first pointed out that income inequality in a country at first rises, reaches a peak and then tends to fall along with the rise in per capita income by ‘trickle down’ effect. EKC indicates that pollutant emissions increase with income in lower income countries but decrease with income in higher income countries. Panayotou first used the term Environmental Kuznets Curve to describe the inverse relationship between pollution and economic development. Grossman and Krueger (1994) AU53: The in-text citation "Grossman and Krueger (1994)" is not in the reference list. Please correct the citation, add the reference to the list, or delete the citation. have illustrated, for a broad set of environmental indicators, the existence of this hypothesized relationship.

Climate Change: To stabilise and reduce CO 2 emissions is a part of the climate change policy to combat the greenhouse effect caused by excessively high atmospheric carbon concentration. Until recently, industrialised countries have emitted the majority of anthropogenic greenhouse gases. Emissions in developing countries are rising very rapidly such that they are projected to continue and account for an increasing portion of global emissions. However, developing countries contend that, historically, emissions from the industrialised world are the main cause of the climate change problem and they should be the first to solve the problem. Thus, climate change represents a significant and complex challenge to policy makers. Economic analysis is crucial to the climate policy debate. Continued research into climate change and appropriate policy action is necessary if governments are going to adopt an efficient and effective response.

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