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Another look at CO2 emissions modelling: the role of energy prices in developed countries
M. Rodríguez and Y. Pena-Boquete*, Applied Economics, Universidade de Vigo, Spain
inertia will prevent us from realise in population growth to slow down CO2 emission rates. That conclusion connects with the Malthusian tradition. The negative environmental impact caused by demographic pressure, as outlined previously by other authors such as Daily and Erlich (1992), Zaba and Clarke (1994) or Birdsall (1992), may arise through a double mechanism: the larger the population (i) the greater the energy demand from industry and transport services, and (ii) the greater the deforestation and land use changes. Following the framework from Dietz and Rosa (1997), Martínez-Zarzoso et al. (2007) considered additionally the energy intensity as a proxy variable to measuring the level of environmentally damaging technology. By applying panel data econometrics they reached different patterns for old and new EU members. For instance, the elasticity emissionpopulation is lower than unity for the former, whereas for the later is 2.73, which is in accordance with the higher marginal propensity to emit in less developed regions as reported in the literature. It remains unclear whether a demographic decline will curb CO2 emissions since there is an increase in the number of households simultaneously to a households size decrease in most European accession countries (MacKellar et al., 1995). As a result, Martínez-Zarzoso et al. (2007) argue that “a review of the Communitarian emissions policy, that takes into account the characteristics of the new EU members, would be desirable. [...] Several factors must be taken into account when establishing the allocation of emission quotas to each country, including population dynamics, income and productive structures and energy intensities”. Furthermore, they found a negative elasticity between emissions and urbanization for more developed countries which has important policy implications: policymakers and experts should recognize the potential value of cities for long-term sustainability. There are plenty of examples that analyse this sort of relationship, most of them for a cross section data on countries and more recently for panel data, but usually the population is included in the dependent variable (per capita emissions) instead of being treated as a predictor in the model. The underlying idea behind most of papers that analyse the IPAT framework is the Environmental Kuznets Curve (EKC)1. The theoretical explanations of the EKC hypothesis are based on three effects: the scale effect, the structure effect and the
Abstract--Climate change due to the emission of greenhouse gases (GHGs) is a critical global environmental problem. In particular, CO2 emissions represent about 80% of GHGs. For this reason, we need a good modelling approach capable to forecast in the short and medium term the evolution of CO2 emissions in order to: (i) design the best policies to reduce GHG emissions and (ii) allow businesses regulated by the European Union Emission Trading Scheme to anticipate the evolution of the European carbon emissions and its policy implications. This paper examines the relationship between CO2 emissions, GDP and the energy consumption in developed countries. A panel data analysis for the period 1980 to 2004 is applied. The findings reported in this piece of research confirm the suspicion in the literature that the relationship among CO2 emissions and GDP may be the result of spurious statistical correlations. Therefore that could be evidence against the EKC hypothesis. Thus the IPAT model and EKC based on GDP as an explicative variable can lead to misleading results.
Index Terms--CO2 Emissions, Econometric Analysis, Energy Consumption, Energy Prices, Environmental Kuznet Curve, GDP.
RLICH and Holdren (1971) suggested the IPAT framework as a way to analyse the determinants of environmental impact from economic development. Accordingly there is an important strand of the literature that tries to relate CO2 emissions with Gross Domestic Product (GDP) or with population growth, or with both variables simultaneously. For instance, Dietz and Rosa (1997) found that there is a linear relationship between the size of population and CO2 emissions for a cross section data on 111 countries. Additionally it includes the weight of the industry in economic activity as a proxy for the level of environmentally damaging technology apart from per capita GDP. This should not be surprising as long as it is capturing a scale effect. As a result, they concluded that demographic
* M. Rodriguez gratefully acknowledge the financial support from Spanish Ministry for Science and Education and ERDF (Projects SEJ200612939/ECON and ECO2009-14586-C02-01ECON), and the Galician government (Project INCITE08PXIB300207PR). M Rodriguez (e-mail: email@example.com); Y. Pena (e-mail: firstname.lastname@example.org); Facultade Empresariais e Turismo, 32004 Ourense, Spain.
See also Dinda and Coondoo (2006), Dinda (2004) and Verbeke and De Clercq (2006) for discussions about the EKC topic.
Bradford et al. However. and demand effects). is the link between government action. Aldy (2005). whereas those concerning global emissions do not offer the expected outcomes. primary energy use in final energy consumption. Martinez-Zarzoso and Bengochea-Morancho (2004). for instance. Cole et al. (2008). They find strong evidence for an EKC.g. (1998) who concluded that their results are consistent with the notion that an EKC estimated from pooled data need not hold for specific individual countries. Kriström and Lundgren. (2005)..). For instance. Moomaw and Unruh (1997) and Friedl and Getzner (2003). etc. (2003).. 2005). Martinez- Zarzoso and Maruotti (2011). Vincent (1997). 2004). Studies for single countries most often address developing countries (e. economic growth in itself does not offer a solution to environmental problems as long as reductions in CO2 emissions will not occur during the normal course of development. 2007). Holtz-Eakin and Selden (1995). composition. But this idea may be controversial as Shen and Hashimoto (2004) find some evidence of an EKC in China over the last decade of the 20th century. 2011). A good example is De Bruyn et al. (1997). are not considered or . Consequently. Furthermore. But generally speaking papers that do not found evidence of EKC do found a positive relationship between per capita income and emissions. Other variables. other studies have explored other underlying factors. 2011). (2009). In fact. (1998). This has been done for USA (Tol et al. The vast majority of investigations regarding the existence of an EKC EKC for per capita CO2 emissions concentrate on cross-section and panel data. (2005). 1995. Holtz-Eakin and Selden (1995) estimates suggest a diminishing marginal propensity to emit carbon dioxide as GDP per capita rises. Vincent. 1999). and therefore the EKC hypothesis cannot be generally accepted. Finally Porter and van der Linde (1995) assert that environmental protection can promote economic growth by increasing efficiency and stimulating technical progress. As a result of that (no homogeneous results in the EKC literature) the validity of this hypothesis has been questioned in some surveys (e. Vollebergh et al. And that finding should raise some concerns about the distributional consequences of policies to reduce emissions. An in deep scrutiny of model specification in the literature shows us that there are a considerable number of studies that consider only GDP and population growth. Equally important. Borghesi and Vercelli (2003) considered that the studies based on local emissions present acceptable results. Shafik (1994). Thus as long as the evidence is rather diverse for panel data and the studies on single countries are rather rare. 2005) and for a large number of countries (Lindmark. In fact there are many examples against this hypothesis. it remains unclear the impact of international trade from the empirical EKC literature (Stern. Shafik and Bandyopadhyay (1992). Barrett and Graddy (2000) argues that the functional form of EKC may be conditioned by policy (environmental regulations. globalisation. structure of the economy. the share of fossil fuels and the carbon intensity of fossil fuel combustion. Perman and Stern (2003) state that when diagnostic statistics and specification tests are taken into account and the proper techniques are used. the results indicate that the EKC does not exist. (1998). 1991. Patel et al. Islam et al. Galeotti et al. Halkos and Tsionas (2001). Sweden (Lindmark. Liu (2005). their consumption structure remains unchanged (Vishal. level of democracy. 2002. For instance. Thus even though rich countries may have be experiencing a change in their production structure by outsourcing the production of pollution intensive products. (2006). some researches look at a single country rather than a group of countries but by taking a much longer period (around 100 years). Bertinelli and Strobl (2004). 2004). This situation is illustrated by the so-called Pollution Haven Hypothesis (PHH)... Stern 1998. Aldy (2007). some papers like Dijkraaf and Vollebergh (1998) indicate that the relationship between income and carbon emissions varies among nations. The EKC literature leads to inconclusive results about this hypothesis. Tucker (1995). Moomaw and Unruh (1997). the level of environmentally damaging technology. regulations and taxes influencing fossil fuel consumption. the effect of government regime-type on environmental quality has been under studied in the EKC debate. etc. Most papers concentrate on crosssection and panel data. Despite the important connection between government action and the provision of public goods such as environmental quality. such as international trade. 1997) even though there are some exceptions addressing industrialized countries like De Bruyn et al. additional research is called for. Although that. Müller-Fürstenberger and Wagner (2007). electoral processes.g.2 abatement effect (Grossman and Krueger. Brock and Taylor (2004. Kahuthu (2006). Besides international trade may influence EKC as a consequence of stricter environmental regulations in rich countries (see for instance He. measured as either policy variables or government regime type. Galeotri and Lanza (1999). Marrero (2010). Thus income may well be endogenous. Galeotti et al. patterns of urbanization and sub-urbanization. energy intensity. to explain CO2 emission growth. and environmental quality. 2004).. though even less explored. Holtz-Eakin and Selden conclude that emissions will keep going with growth because output and population will expand faster in lower-income nations (with their high marginal propensity to emit) than higher ones (which eventually pass the turning point). See for instance. Wagner (2008). among many others. the component effects of income (scale. Friedl and Getzner (2003). Despite this feature. By taking a step further in this reasoning. Huang et al. Roberts and Grimes (1997). Most of the criticisms are related to the use of non-appropriated techniques and the presence of omitted variables bias. Finally. Holtz-Eakin and Selden (1995). Schmalensee et al. Put in other words. Besides note that an EKC for CO2 emissions per capita does not imply an EKC for CO2 emissions within the wide range of data observations as showed in York et al. Dijkraaf and Vollebergh (1998). This result is consistent with the 'inverted-U' shape for the relationship between per capita GDP and several air pollutants found in Grossman and Krueger (1991) and Selden and Song (1994).
2 uit = μi + υ it 2 where μi ∼ IID (0. Finally. land area. (1997). As a general conclusion it could be said that there is evidence of an inverted U-shape pattern associated with the EKC in HsiaoTien and Chung-Ming (2010). We also account for the aggregate energy use effect 2 Ang and Zhang (2000) provide a good methodological overview of the several studies that have used decomposition methodologies to track the sources of emissions growth. independent of each other and among themselves. this energy mix is not a primary unit for policy-makers decisions. They found that the magnitude of this effect is small but they draw our attention to the fact that their oil price measure is only imperfectly correlated with domestic energy prices. Wang et al. Heil and Selden (2001) experiment with a method for incorporating oil prices into the model. country-specific factors that will impact on emissions like climate. through Granger causality test) between income and emissions in order to infer the direction of causality among variables. But nearly all of the studies described above omit energy prices. For a good review of the literature see Löfgren & Muller (2010). Dinda and Coondoo (2006). even more important than energy intensity.. (2000) and Schipper et al.. II. cross-section estimates of the equations will be biased and inconsistent.σ υ ) .σ μ ) and υi ∼ IID (0. (1998). 2 oil coal gas dit = δdit −1 + β1 y it + β2 y it + β3eit + β4 pit + β5 pit + β6 pit + β7o + uit . First. Apergis and Payne (2009). This literature examines the time series dynamics (i. Illustrations for the former could be found in Chung (1998). Based on the Environmental Kuznetz Curve (EKC) we include the Gross Domestic Product per capita (yit) and its square in order to control for the possible inverted U-shape of the curve. Just to close this survey of the literature. and for the latter see for instance Cozzi and Di Giulio (1999). The trade variables are now insignificant while otherwise they have been shown to have considerable explanatory value. As a result there is not clear and unambiguous evidence that income gains will reduce energy use at any level of income.3 dismissed by most researches. MODELLING CO2 DISCARGE AND THE DATA BASE As Marrero (2010) shows not just economic development is important for explaining CO2 discharge on the environment but also the energy mix. Liaskas et al.. . the energy mix is driven for the energy prices and the production capacity. there is an alternative methodology for analyzing the driving forces behind CO2 emissions growth by performing some kind of factorial decomposition breakdown.. Some general conclusions emerge from this literature: (i) the level of economic activity and structural change play an important role on the behavior of CO2. (iii) the energy intensity effect was fully exploited normally by the industrial sector. due to the wide range of energy taxes. 3 Within this class of models. but can play a significant role in single cases. (2009). a typical macro panel is not likely to be a random sample from a larger universe of countries. energy consumption and output. Of course. Nevertheless. Another approach used for look at the relationship between income and pollutants is the efficient frontier methods (frontier models) which have not been surveyed for this paper. Their results indicate that the energy price is an important explanatory variable. However Vishal (2011) does not provide such evidence of an EKC. Metcalf (2008)2. Furthermore. i = 1. and other distortions that many countries impose. Shipper et al. etc. The first study to specify energy prices in regression models that test for an EKC for carbon emission is Agras and Chapman (1999). if the individual effect represents omitted variables. (2000). They suggest also that evidence for an EKC for carbon emission is weakened when energy prices and trade variables are included. (ii) the energy and transport sectors are the main causes for the increase in CO2 emissions.. in fact. geography. In addition. (2005). and we incorporate also its lag in order to control for dynamics.T We will assume that the fixed effect uit follows a one-way error component model3. dit is CO2 discharge on the environment per capita. since last decade there is a growing literature dealing with the dynamic causal relationships between pollutant emissions. In this model. The long-run price model shows that income is no longer the most relevant variable for environmental quality or energy demand but it is still a significant variable. (2011). and finally (iv) fuel substitution does usually not contribute much to lowering emissions. resource endowments. If these omitted variables are also correlated with per capita GDP. Greening et al.. They used Hanushek’s (1974) method to regress the estimated year effects from the emissions–GDP model on global energy prices. They conclude that the problem with such a diverse results may be an over-identified model. (2007). Ang (2007). t = 1. Niu et al.N. the fixed effects specification is a common choice for macroeconomic analysis and it is believed to be more appropriate than a random effects model for two reasons.e. there are also exogenous.. and Lee and Lee (2009). Hamilton and Turton (2002). These techniques require detailed sectoral data and do not allow for stochasticity. Akbostanci et al. Second. However these conclusions may be subject to the short of countries being analysed (developed versus developing countries).. The literature has follow two main approaches: (i) modified input-output modelling for environmental analysis and (ii) Index decomposition methodologies such as the Divisia and Laspeyres index. subsidies. it causes other factors to become insignificant that were previously important. Coondoo and Dinda (2002). Bataille et al. it is likely that these country-specific characteristics are correlated with the other regressors. Richmond and Kauffmann (2006) arrived to similar results concluding that “evidence for a turning point in the relationship between income and carbon/energy use disappears when real light fuel oil prices are included in the model” and thus previous findings are based on spurious statistical relationship.
even if the υ it are not serially correlated. Moreover. as typical in country studies.59 12. United Kingdom.87 An alternative transformation that wipes out the individual effects is the first difference transformation. as long as the υ it themselves are not correlated. Italy. France.t−1 .07 2.75 0.49 -11.49 2. Therefore. Belgium. coal and gas instead of the shares energy consumption.48 2.44 1. Slovak Republic.t −1 = (di.06 Min 0. di. the GMM framework flexibly accommodates multiple endogenous variables. provided Monte Carlo simulation comparison between one-step difference and the estimator proposed in Blundell and Bond (1998). The assumption means that there is no correlation between the GHG emissions and the country-specific effect in the absence of conditioning on other variables. Japan.04 -5. 20 and 30.57 0. the within transformation wipes out the μi . But even for specific effects play no role in GHG emissions. Arellano and Bond (1991) argue that additional instruments can be obtained in a dynamic panel data model if one utilizes the orthogonality conditions that exist between lagged values of dit and the disturbances υ it .04 0. ESTIMATION METHODOLOGY The inclusion of a lagged dependent variable in the model (1) renders the OLS estimator biased and inconsistent6.18 Max 3. but ( di. Judson and Owen (1999) perform some Monte Carlo experiments for N = 20 or 100 and T = 5. He found that the system GMM estimator has a lower bias and higher efficiency than all the other estimators analysed. Our contribution to the model would be to incorporate the prices of primary energies (pit): oil products. Biases increase with δ and decreases with T.18 3.t −2 ). 9 Note that the assumption E (μ Δd ) = 0 does not imply that the countryi i2 III. 5 Countries included are Austria. This instrumental variables estimation method leads to consistent but not necessarily efficient estimates because it does not make use of all the available moment conditions (Ahn and Schmidt (1995)).20 4.t −1 − di.08 4.84 8.01 5. Table 1.28 -0. The source for this data sample is the “Energy Statistics of OECD countries.t −1 − di. Anderson and Hsiao (1981) suggested first differencing the model to get rid of the and then using Δ di. system GMM is not in principle applicable. Later on.93 5.t − υ i. 4 i.t-1 is correlated with the error term.47 0. 2007 edition” and the “Energy Prices & Taxes 2nd Quarter 2007” both published by International Energy Agency (IEA) and Organisation for Economic Co-operation and Development (OECD). We have applied several tests and we found that a GHG emission has a unit root8. These authors also argue that including time dummies or transforming variables into deviation from time means should be enough to satisfy the stationary conditions. difference GMM is an even poorer choice.44 7. (2001).32 -5. Since it is not possible to calculate a price for renewable energy we include production of renewable energy showing the country capacity for using this kind of energy4. Switzerland. Dev. as it not only greatly improves the precision but also greatly reduces the finite sample bias.t −1 Details about the variables definitions and the database are showed in the Appendix. that relies on relatively mild restrictions on the initial condition process.16 5. since any arbitrary pattern in the time means is consistent with a constant mean of the transformed series for each country9. Under these conditions. Turkey. as explained in Bond et al. For the fixed effects estimator. United States.t −1 ) where d = ∑ d (T −1) will still be correlated T with ( υ it − υ i ) even if υ it are not serially correlated7. Check Republic. Nevertheless. denoted system GMM. Hungary. T = 30. These instruments will not be correlated with Δυ it = υ i.48 1. and it does not take into account the differenced structure on the residual disturbances ( Δυ it ).65 0. including the standard one-step difference GMM estimators.t-1 is also a function of μi .4 (Marrero.11 6.48 0.41 0. .95 -7.t − 3 ) or simply di. 6 See Sevestre and Trognon (1985) for the magnitude of this asymptotic bias in dynamic error component 7 This is because is correlated with by construction (the latter average contains which is obviously correlated with ). Table 1 summaries the main descriptive statistic.23 4. and showed that system GMM has substantial asymptotic efficiency gains. Descriptive statistic of the data sample. Mean ln(GHGpc) ln(GDPpc) ln(GDPpc)2 ln(Epc) Lag_ln(Epc) ln(E prices) ln(Oil prices) ln(Coal prices) ln(Gas prices) ln(Renewables) 2.02 4. Nevertheless.13 2. the within estimator will be biased by O(1/T) and its consistency will depend upon T being large (see Nickell 1981). 10. only if T → ∞ the within estimator of δ and β will be consistent for the dynamic error component model. In fact.74 0. Blundell et al. (2001). Since dit is a function of μi .70 Std. 2010) including the total primary energy consumption per capita eit.t-2 as an instrument for Δ di. Arellano and Bond (1991) propose a generalized method of moments (GMM) procedure that is more efficient than the Anderson and Hsiao (1982) estimator. reviewing developments to improve on the relatively poor performance of the standard one-step difference GMM estimator for highly autoregressive panel series. 0.70 5. Denmark.t −1 t =2 i. it immediately follows that di. biases could be as much as 20% of the true value of the coefficients of interest 8 8 Fisher Test for panel unit root using an augmented Dickey-Fuller test (2 lags) we are not able to reject that GHG per capita has a unit root at a level of 1%. Our sample is a balanced panel of 15 European countries5 and 390 observations for the period 1980 to 2004.08 3.t − 2 − di.89 -4. Soto (2007) analysed through Monte Carlo simulations the properties of various GMM and other estimators when the number of individuals is small.18 -7. Finland. Poland.t − 2 = (di.81 0.
our best available choice is the system-GMM estimator by Blundell and Bond (1998). . For this reason we attempt in equation nº9 to identify which effect dominates by including the increase (difference) experienced by this variable. 10 Within the Arellano and Bond (1991) procedure. while AR(2) residuals are. the particular structure of the firstdifference model implies that an asymptotically equivalent GMM estimator can be obtained in one step. under homoscedasticity of the νit disturbances. Both the current and the lag values appear to be significant but with opposite sign. Instead we include the country-trend dummies to account for changes such as technological ones during the period 1979-2004 for each country. We will apply both techniques in order to assess the robustness of our results. Neither the GDP per capita nor its square appears to be significant. RESULTS As we have explained in the previous section. all estimations have been checked using estimates based on OLS and within transformation procedures in order to appraise the robustness of the results. Moreover.e. IV. Only for the last one we could accept the EKC hypothesis. AR(1) residuals are not detrimental to estimation. There are two main techniques to limit the number of instruments: to use only certain lags instead of all available lags or to combine instruments through addition into smaller sets. for example efficiency over time. too. and the p-values of the Arellano-Bond AR(1). We also attempt to account for the dynamics in the adjustment of the energy consumption per capita and the GDP per capita (columns 2 and 3 in Table 2). Table 2 shows the results for the CO2 discharge on the environment. The estimations for our model do not show autocorrelation of second order and Sargan test performed well. reducing the power of the Sargan test (Roodman 2009a. For all specifications we get the same results independent of the number of the instruments being used. the suitable estimator for our model is Blundell and Bond's (1998) systemGMM estimator. On the other hand. To the contrary of Marrero (2010) we do not include the shares of final energy consumption to account for final energy composition effect.5 As a consequence of all this. Additionally. And country-specific trend accounting for changes in the behaviour over time. the best available estimator for our equation is the system-GMM estimator by Arellano and Bond (1998) and we use the one-step estimator including Finally. Arellano-Bond AR(2)10 and Sargan tests. For per capita GDP neither the current values nor the lag appear to be significant in most of the specifications. Therefore the CO2 dynamics are better explain by changes in per capita energy consumption instead of its level counterparts (current and lagged) which now turn to be not significant. it may be more important from policy perspective to account for the prices that drive this energy mix. We need to allow for this serial correlation in The first specification (columns 1 in Table 2) shows the basic approach to validate the Emissions Kuznets Curve (EKC) hypothesis in a dynamic framework according to the survey in section II. we consider that using the shares of primary energies into the economy is not a proper approach. Although this is a two-step estimator. failing to expunge their endogenous components and biasing coefficients estimates. First. We also incorporated specific-year dummies accounting for economic changes affecting all countries. In fact this shares could account for changes in sector composition due to other supply-demand reasons. we test for different dynamics adjustments for per capita CO2 according to different specifications for energy consumption. Nevertheless. Nevertheless. the increase of per capita energy consumption has a positive and significant effect on CO2. too many instruments generated system GMM can lead to a problem of overfitting. We have examined the behaviour of the coefficients and the overidentification test when we reduce the number of included instruments. It is clear for any reader that the energy mix should be an important factor to determine the emission levels. even in the presence of considerable heteroscedasticity. Another further feature of our results is the importance of allowing for an AR(1) component in equation function error term. Besides. the dependence of the two-step weight matrix on estimated parameters makes the usual asymptotic distribution approximations less reliable for the two-step estimator. Nevertheless the influence of this variable on CO2 values is very tinny attending to the range of values for both in our sample data base. As a result. we do not find evidence for the EKC. we also include country dummies to account for the particular factors inherent to each country not considered in the model. we include the average price of the oil products (equation 3 and 4) as a order to obtain any valid lagged internal instruments in first-differenced or equations in levels. Thus we suspect that those two cases where we did found a significant coefficient for GDP should be the result of spurious statistical relationship as reported in the survey. i. Instead. energy prices and renewables. 2009b). we found that per capita energy consumption is always an important element explaining CO2 discharged on the environment. Consequently. Instrument can overfit endogenous variables. As we said before. The validity of the assumptions used to obtain the moment conditions of System GMM can be assessed using a Sargan overidentification test under the null that these moment conditions are valid. GDP. We have applied some robustness test for all specifications. We consider that the shares of the sectors consumption are not a good proxy for changes in technology efficiency between sectors. we report the number of observations and instruments being used. Simulation studies have suggested very modest efficiency gains from using the two-step version.
This seems a reasonable assumption as oils products represent the main energy source in our economies and many other like natural gas are usually correlated to it. Results show that gas and coal prices appear to be significant if we do not account for the adjustments in the total energy consumption (lagged and in differences). i. Moreover. The results show that oil prices appear to be significant in all specifications and present a negative sign. so we include the prices for coal and gas too. Nevertheless. CONCLUSIONS The findings reported in this piece of research confirm the suspicion in the literature that the relationship among CO2 emissions and GDP may be the result of spurious statistical correlations. using just the oil prices it is not possible to shed light into the substitution effect of the different energies. i. V. Therefore that could be evidence against the EKC hypothesis. Finally the production of renewable energy should be important to reduce the emission intensity of the economies (unfortunately it is not possible to calculate a price for the renewable). As our preferred specification is the last column (nº9 in Table 2) again we are confident that we found a spurious statistical relationship for both prices and therefore they do not deserve our attention. the possibility of using renewable energy is an important tool to decrease the CO2 emissions. gas and coal prices show a positive sign which may be subject to alternative interpretations.e.6 reference price. . i. This variable seems to be negative correlated with CO2 emissions and significant in all specification.e. (i) there is an unexpected positive price elasticity of emissions or (ii) they show a substitution effect respect to the oil products prices.e. an increase in the oil prices lead to a decrease in the emissions.
358*** ‐1.268 0.200*** 0.047** 0.7 Table 1: System-GMM estimates for the CO2 discharge on the environment.823*** 1.012 ‐0.009 0.891 (3) 0.458*** 4.001 0.008 0.012 ‐0.013** 0.368*** 387 55 0.02 1.070*** ‐0.276 ‐0.961 0.1.021 0.042*** 0.682 0.394*** ‐1.650*** ‐0.155* ‐0.659*** 0.555* 0.824*** ‐0.003 0.028*** 0.009 0.05.011 1.499 (5) ‐0.01 0.820*** 1 390 54 0 0.038*** 0.046 390 46 0 0.020*** 0.483* 0.027*** ‐0.767 387 55 0 0.004 0.34 0.016*** ‐0.933*** ‐0.191 (8) ‐0.584 0.974*** ‐0.074 0.458*** 4.037* ‐0.112*** ‐0.101 ‐0.121*** ‐0.258 0.266 387 62 0.037 390 47 0 0.27 0.007 0.778 0.010* ‐0.006* 0.336 (6) ‐0.57 0.001 0. *** p<.036*** year‐specific dummies and country trends included .761*** 1.336 0.276 (9) ‐0.802 0.452*** 387 51 0.016 0.863** ‐0.45 0.563 0.295 0.008* 0.597*** 390 53 0.788*** 1.629 387 59 0. Ln(GDPpc) Lag_ln(GDPpc) Ln(GDPpc)2 Ln(Epc) Lag_ln(Epc) D_ln(Epc) Ln(Oil prices) Ln(Coal prices) Ln(Gas prices) Ln(Renewables) Lag_ln(GHGpc) Constant Observations Instruments p value AR(1) p‐value AR(2) p‐value Sargan * p<.018 (2) ‐0.917 0.090*** ‐0.967*** ‐0.206 0.083 0.019*** 0.001 0.016 (4) ‐0.142 (1) 0.472 0.018*** 0.001 0.003 0.288*** 5.071*** 0.006 0.265 1. ** p<.49 (7) ‐0.01 0.
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