decoupling analysis between economic growth and co2 ... · decoupling analysis between economic...

Decoupling analysis between economic growth and CO2 emissions: Insights from estimation of

consumption-based CO2 emissions

Systems Analysis GroupResearch Institute of Innovative Technology for the Earth (RITE)Contact to : Takashi Homma, Keigo AkimotoTEL: +81-774-75-2304, E-mail: [email protected]

September 25, 2018

Background and purpose of this analysis2

[Background]♦ Historically a strong positive correlation between GDP and CO2 has been observed globally.

Some argue that positive correlation has vanished recent years, meaning that GDP growth and CO2 emissions might have “decoupled”. However, possibility has been pointed out that developed countries might avoid emissions by importing CO2 embodied in goods and services through international trade, instead of producing them within their countries (OECD analysis until 2011 (2015)).

[Purpose of this analysis]♦ It is important to show various data on “decoupling” between GDP and CO2 emissions, but

more important to understand the factors and to draw implications for future projection or policy-making.

♦ In this analysis of major countries emissions in global economy, we estimate consumption-based* CO2 emissions from energy by nation using latest statistics, and analyze their factors and time-series changes. CO2 emissions embodied in trade are estimated between 2000 and 2014 to estimate consumption-based CO2, which are compared with production-based CO2. In nations with developed service economy, apparent CO2 emissions (i.e. production-based) might look small, however consumption-based CO2 emissions that include emissions embodied in trade (which are not considered in statistic emissions counting), should be included in analysis.

*According to IPCC(2014), OECD(2015) or IMF(2018), the term “Consumption-based” is used in this analysis. To be precise, the term should be “CO2 Emissions Embodied in Final Demand and Net Imports”.Production-based CO2 emissions: CO2 emissions generated inside the territory of the country, regardless of the kind of relevant activities. Equivalent to CO2 emissions in common statistics.Consumption-based CO2: CO2 emissions generated to meet the domestic demand (consumption and investment) of the country, which can be estimated by adding/subtracting CO2 emissions embodied in imported/exported goods on/from production-based CO2.

Definition of “Decoupling”3

GDP increases, while primary energy consumption or CO2intensity (CO2 emissions divided by GDP) decreases

(GDP elasticity: higher than 0 and less than 1.0)

GDP increases, while primary energy consumption or CO2emissions decrease

(GDP elasticity: less than or equal to 0)

Handrich1) weak decoupling strong decoupling

PwC2) relative decoupling absolute decoupling

Unless otherwise stated, these cases are mentioned as “decoupling” in this analysis.

1) Handrich et al.(2015) Turning point: Decoupling Greenhouse Gas Emissions from Economic Growth2) PwC(2013) Decarbonisation and the Economy

1. Global CO2 Emissions Outlook

2. Analysis of CO2 emissions from major countries: Implications from consumption-based CO2emissions

3. Conclusion

Contents4

1. Decoupling trend in global economy and major countries

1.1 Correlation between global GDP growth and CO2emissions 6

GDP elasticity1971-2015 0.632000-2015 0.812009-2015 0.66

Note:IEA statistics(2017) except 2016-2017, which are complemented with a calculation using IEA preliminary 2017 for CO2 and IMF(2018 Apr.) for GDP

y = 0.3207x + 8.0947R² = 0.9865

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Global GDP (Trillion 2010 US$/Yr, MER)

Y1971

Y2000

Y2010 Y2017

linear regression equation(1971-2010)

y = 0.3435x + 6.7678R² = 0.9429

202224262830323436

45 55 65 75 85

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2(G

tCO

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)

Global GDP (Trillion 2010 US$/Yr, MER)

Y2010 Y2017

Y2000

Y2016

linear regression equation(2000-2015)

Fundamentally, a strong positive correlation between global GDP and CO2 emissions is observed. Emissions were almost flat between 2013 and 2016, leading to an argument of global decoupling, but eventually increased again in 2017.RITE has been pointing out that, based on the long-term analysis, emissions increased too fast for the world demand during 2009-2013 and that the flattening between 2013 and 2016 may be caused by a kind of economic counter-action for the too much CO2 emitting activities during 2009-2013, adjusting the demand-supply relationship.

1.2 Correlation between global GDP and electricity consumption 7

Especially, a correlation between global GDP and electricity consumption remains strongly positive.

Source) IEA Statistics 2017

y = 340.64x - 1308R² = 0.9984

0

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実績値の線形回帰式

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linear regression equation (1971-2015)

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UK1982

2008Malaysia

1.3 Relationship between GDP and CO2 emissions in major countries 8

• Several developed countries seem to follow decoupling trend.

• On the other hand, CO2emissions per capita vary widely among countries with similar GDP per capita, due to heterogeneity in their land area and industrial structure.

• Switzerland, Sweden and France are thought to be on the leading edge of decoupling trend because of their small CO2 emissions despite their relatively high GDP. But their emission levels have conventionally been low due to high ratios of hydro and nuclear.

• Increase of historical CO2emissions by China is much steeper than forerunners.

• Detailed investigation is required to conclude whether these trends are truly contributing to global decoupling, considering international sharing of industry and domestic industrial structure .

1971 - 2015 (1990- for EU28)

Desirable trend of decoupling

Although several developed countries appear to be following decouplingtrend as a whole, it is hard to reach a clear conclusion as various andcomplicated factors are entangled.

(in 2010 exchange rate)

1.3 Relationship between GDP and CO2 emissions in major countries: Energy mix of Switzerland, Sweden, France and Japan (ref) 9

0%

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2000 2005 2016 2000 2005 2016 2000 2005 2016 2000 2005 2016

Switzerland Sweden France Japan

Elec

tric

ity

Coal Oil Natural gas Nuclear Hydro/geothermal Solar/wind/other Biofuels and waste

CO2 emissions from Switzerland, Sweden and France are relatively small despite theirrelatively high GDP. These trends build upon conventionally high ratios of nuclear andhydro, and these countries are not reducing their ratios of fossil fuel power generationafter 2000.

1.3 Relationship between GDP and CO2 emissions in major countries: Economic growth factor of UK and Germany (ref) 10

Source: Koji Nomura, https://www.dbj.jp/ricf/pdf/research/DBJ_RCGW_DP60.pdf

- Presumed factors of GDP growth are increased workforce caused by an immigration policy for the case of UK, and increased labor quality by immigrants for the cases of UK and France.

- Decreasing employment of blue-collar caused by increased immigrants and declining manufacturing industry are pointed out as one of the factors of Brexit. Similar social conditions are seen also in Sweden.

1.3 Relationship between GDP and CO2 emissions in major countries: GDP growth by industrial sector in UK (ref) 11


While insurance or financial services have achieved higher growth rate, energy-consuming industriessuch as manufacturing industry marked negative growth. Production supply has been transferring fromdomestic manufacturing to foreign countries, thus leading to a concern that global CO2 emissions mightnot be reduced as a result. => Analysis of consumption-based CO2 emission is essential.

Energy cost share (2014) and growth rate (2000-2014) by industry

1.3 Relationship between GDP and CO2 emissions in major countries: GDP growth by industrial sector in Germany (ref) 12

Higher growth rates have been achieved in office support or information, as well as motor vehicles.However, Germany has not achieved so much emissions reduction after 2000, and steady export ofmotor vehicles affected by relatively weaker euro seems to have contributed to its economic growth.


Energy cost share (2014) and growth rate (2000-2014) by industry

2. Analysis of CO2 emissions from major countries: Implications from

consumption-based CO2emissions

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Note) Estimations (2010US$) based on IEA statistics (2017), WIOD2016.

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Machinerymanufacturing

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(MtC

O2)

Production-based CO2 emissionsConsumption-based CO2 emissionsDifferences (=[Consumption-based] - [Production-based]) [Right axis]

－17%

－11%

2.1.1 EU28: production-based and consumption-based CO2 emissions (2000-2014) 16

Note) Analyzed using IEA statistics(2017) for CO2 emissions, WIOD2016 for International Input-Output Table. Consumption-based CO2 emissions are estimated based on Peters et al.(2008).

Financial crisis aftermath?

- Although Ministry of the Environment of Japan argues a progress in carbon productivity for EU after EU ETS implementation in 2005, growth of consumption-based CO2 was larger until 2008, expanding difference between consumption-based CO2 and production-based CO2.

- This difference is shrinking after the financial crisis. Still, consumption-based CO2 in 2014 decreased by 11% compared with 2000, which is smaller than decrease of production-based CO2 of 17%.

- When normalized by production-based CO2, the difference became almost flat after 2009, and increased by 7.1pp during 2000-2014.

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+7.1pp+9.6pp

pp: percentage point

-1500 -1000 -500 0 500 1000 1500 2000

CO2 imported

CO2 exported

Net imported CO2

-1500 -1000 -500 0 500 1000 1500 2000

CO2 imported

CO2 exported

Net imported CO2

-1500 -1000 -500 0 500 1000 1500 2000

CO2 imported

CO2 exported

Net imported CO2

-1500 -1000 -500 0 500 1000 1500 2000

CO2 imported

CO2 exported

Net imported CO2

US EU Japan Developed Russia China India Rest of the world

2.1.2 EU: CO2 emissions embodied in trade by region17

2014

2010

2000

2005

• CO2 emissions embodied in imports from China (mainly of machinery) or Rest of the world (mining) have increased after 2005.

• Although imports in value increased continuously after 2005, CO2 intensity of imports decreased considerably, thus contributing to modest decrease of CO2 emissions embodied in imports.

Note: import is exhibited as positive, export as negative

(MtCO2)

(MtCO2)

(MtCO2)

(MtCO2)

0 100 200 300 400 500

China

Rest of the world

China

Rest of the world

China

Rest of the world

China

Rest of the world

2014

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2005

2000

CO2 Imported (MtCO2)Machinery and Transportation Equipment Chemical Textile Mining and Energy Others

2.1.2 EU: CO2 emissions embodied in imports from China and Rest of the world by industrial sector 18

Machinery

Mining

2.1.3 EU: Factor analysis of CO2 emissions embodied in Trade 19

Note: Import and export have been converted to real values using WDI-US deflator(2010 standard)

Imported CO2

Exported CO2

Changes in import and export values (shown in orange) were almost same during 2000-05, but decrease inintensity for import (shown in light green) was less than those of export due to more imports from regionswith higher intensity, causing increased consumption-based CO2 emissions compared to production-basedCO2. The difference in intensity change became smaller between imports and exports after 2005.

-7.5%-5.0%-2.5%0.0%2.5%5.0%7.5%

10.0%

2000-2005 2005-2010 2010-2014

Annu

al c

hang

e re

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f Im

port

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O2

(%/Y

r) Intensity(=Imported CO2/Import)(kgCO2/$)Import ($)

Imported CO2 (MtCO2)

-7.5%-5.0%-2.5%0.0%2.5%5.0%7.5%

10.0%

2000-2005 2005-2010 2010-2014

Annu

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e re

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f Ex

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O2

(%/Y

r) Intensity(=Exported CO2/Export)(kgCO2/$)Export ($)

Exported CO2 (MtCO2)

2.1.4 UK: production-based and consumption-based CO2 emissions (2000-2014) 20

- Report from Ministry of the Environment explains that carbon productivity has substantially progressed for UK (especially on a local currency basis), but consumption-based CO2 is larger than production-based CO2 (i.e. larger contribution of CO2 emissions embodied in import, which is counted as emissions outside the area and not counted as UK emissions in usual statistics).

- Difference between consumption-based CO2 and production-based CO2 increased toward 2007, and slightly increasing after 2010.

- Although production-based CO2 in 2014 decreased by 22% relative to 2000, consumption-based CO2 decreased by 14%, falling smaller than production-based one. The share of CO2emissions embodied in trade is 30% in 2014 (compared to production-based), higher than that of Japan, US or EU average.

Note) Analyzed using IEA statistics(2017) for CO2emissions, WIOD2016 for International Input-Output Table. Consumption-based CO2 emissions are estimated based on Peters et al.(2008).

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+12.0pp


2.1.5 Sweden: production-based and consumption-based CO2 emissions (2000-2014) 21


- Report from Ministry of the Environment explains that carbon productivity is extremely high, but consumption-based CO2 is larger than production-based CO2 (i.e. larger contribution of CO2 emissions embodied in import).

- Difference between consumption-based CO2 and production-based CO2 increased toward 2008, and became almost flat or decreased slightly after 2011.

- Consumption-based CO2 did not decrease as production-based CO2 did. The share of CO2 emissions embodied in trade was extremely high,73% in 2014 (compared to production-based).

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－8%－8%

2.2.1 US: production-based and consumption-based CO2 emissions (2000-2014) 23


Impact of shale gas?

- Difference between consumption-based CO2 and production-based CO2 in US increased substantially towards 2006.

- However, this difference turned to decrease after expansion of shale gas production in 2006, possibly caused by reshoring of manufacturing industry due to the availability of cheaper energy. This difference became flat after 2009.

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2.2.2 US：CO2 emissions embodied in trade by region24

2014

2010

2000

2005

• CO2 emissions embodied in imports from China (mainly of machinery) increased towards 2005, followed by continuing emissions of similar level.

• Although imports in value increased continuously after 2005, decrease in CO2 intensity of imports affected larger, thus contributing to modest decrease of CO2 emissions embodied in imports.


(MtCO2)

(MtCO2)

(MtCO2)

(MtCO2)

0 100 200 300 400 500 600

China

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China

Rest of the world

China

Rest of the world

2014

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CO2 Imported (MtCO2)

Machinery and Transportation Equipment Chemical Textile Mining and Energy Others

2.2.3 US: CO2 emissions embodied in imports from China and Rest of the world by industrial sector 25

Machinery

Mining

2.2.4 US: Factor analysis of CO2 emissions embodied in Trade 26

Imported CO2

Exported CO2

As increase in import value was greater than that in export value (shown in orange) during 2000-05, andintensity for import (shown in light green) became larger, consumption-based CO2 emissions increased morethan production-based ones. After 2005, changes in import value of mining, crude oil and coal (incl. energy)with higher intensity were small due to a shale gas production of her own (shown in orange), and intensity ofimported CO2 decreased substantially (shown in light green, as explained in page 25 ; a 2005-2010 change inCO2 from mining of rest of the world). At the same time, export value of most industries except textileincreased substantially. These factors shrank a difference between consumption-based and production-basedCO2 emissions in 2005-2010.

-6.0%

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Note: Import and export have been converted to real values using WDI-US deflator(2010 base year)

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+4%

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2.3.1 Japan: production-based and consumption-based CO2 emissions (2000-2014) 28

Note) Analyzed using IEA statistics(2017) for CO2 emissions, WIOD2016 for International Input-Output Table. Consumption-based CO2 emissions are estimated based on Peters et al.(2008).

Financial crisis aftermath

Impact of nuclear shutdown

A trend in consumption-based CO2 is similar to that in production-based CO2, moderately diminishing the difference. This indicates that Japan maintains manufacturing industry while avoiding expansion of carbon leakage. As a result, decrease of CO2intensity of Japan might be less than that in EU or US.

During 2000-2014, production-based CO2 increased by 4%, while consumption-based CO2 decreased by 1%. When the difference is normalized by production-based CO2, it decreased by 5.2 pp during 2000-2014.

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Net imported CO2

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Net imported CO2

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CO2 imported

CO2 exported

Net imported CO2


2.3.2 Japan: CO2 emissions embodied in trade by region 29

2014

2010

2000

2005

• CO2 emissions embodied in imports from China (mainly of machinery) increased towards 2005.

• Although imported value increased after 2005, decrease of CO2 intensity of imports had larger impact.


(MtCO2)

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CO2 Imported (MtCO2)Machinery and Transportation Equipment Chemical Textile Mining and Energy Others

2.3.3 Japan: CO2 emissions embodied in imports from China and Rest of the world by industrial sector 30

Machinery

2.3.4 Japan: Factor analysis of CO2 emissions embodied in Trade 31

Note: Import and export have been corrected to real values using WDI-US deflator(2010 standard)

Imported CO2

Exported CO2

Imports continue to increase steadily from China or Rest of the world (machinery from China, or mining from Rest of the world (substantially after the Great East Japan Earthquake)). Imported CO2 decreased during 2005-2010 due to substantial decrease in intensity of imports such as China.As for exported CO2, intensity of individual industries decreased during 2000-2005, however, overall intensity increased due to higher share of metal products among export value, which led to an increase in exported CO2. During 2010-2014, exported CO2 increased because of large increase of intensity after the Earthquake, although export value decreased due to strong yen.

-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%

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2.3.5 Energy productivity in Japan and its decomposition analysis (1/2) 32

Source) H29 ALPSIII Report, Analysis by Prof. Nomura

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3

4

第II期 (1955–1973) 第III期 (1973–1990) 第IV期 (1990–2008) 第V期 (2008–2015) 予測値

エネ転換要因

エネ高度化要因

産業構造要因

品質調整済みエネルギー生産性（QAEP）

エネルギー生産性

(%)

政策ターゲット

（2.4%）

(Values in 2015 =1.0)

Energy productivity

Labor productivity [Right axis]Capital productivity

Due to Energy ConversionDue to Energy quality

Due to changes in industrial structure

Energy productivityQuality-adjusted energy productivity (QAEP)

Policy target

ProjectionPeriod II (1955-1973) Period III (1973-1990) Period IV (1990-2008) Period V(2008-2015)

- Considerable improvement has been achieved during recent Period V (2008-2015), not with a change in industrial structure

2.3.5 Energy productivity in Japan and its change factors (2/2) 33

Source) H29 ALPSIII Report, Analysis by Prof. Nomura

Period V(2008-2015)

Energy productivity and growth rate by chemical productsNote: Figures in parentheses indicate(share of value-added, share of energy consumption)

Energy productivity in 2011 (logarithmic values)

Changes in gross output(Period V: 2008-2015,average annual growth rates)

1. Agriculture, forestry and fishing2. Mining of coal and lignite3. Other mining and quarrying4. Construction5. Food products6. Textiles7. Wearing apparel8. Wood and of products of wood9. Furniture10. Paper and paper products11. Publishing activities12. Chemicals13. Refined petroleum products14. Coke oven products15. Rubber and plastics products16. Leather and related products17. Other non-metallic products18. Basic iron and steel19. Non-ferrous metals20. Fabricated metal products21. Machinery and equipment22. Computer23. Communication equipment24. Electronic components25. Consumer electronics26. Motor vehicles27. Other transport equipment28. Precision instrument29. Other manufacturing30. Transport via railways31. Other land transport32. Water transport33. Air transport34. Warehouse, other transport35. Telecommunications36. Electricity37. Gas38. Water supply39. Wholesale and retail trade40. Financial and insurance41. Real estate42. Education43. Research44. Human health45. Other service46. Public administration47. Activities of households

Industrial contribution rate to energy productivity (0.9%)

Drugs and medicines (40.4%, 0.7%)

Gelatin and adhesives (1.1%, 0.1%)

Paints (2.5%, 0%)

Agricultural chemicals (1.7%, 0%)

Cosmetics, toothpaste (6.2%, 0%)

Chemical fertilizers (1.7%, 2.4%)

Miscellaneous industrial inorganic chemicals (4.9%, 1.2%)

Miscellaneous industrial organic chemicals (4.4%, 0.5%)

Inorganic pigments (0.8%, 0.1%)

Compressed and liquefied gases (1.1%, 0%)

Salt (0.2%, 0.4%)

Cyclic intermediates (2.1%, 0.7%)

Basic petrochemicals (1.9%, 65%)

Synthetic rubber (2.2%, 1.2%)

Oil and fat products, soaps, synthetic detergents, surface-active agents

Printing ink (0.9%, 0%)

Aliphatic intermediates (2.7%, 2.7%)

Soda

Synthetic dyes and organic pigments (0.3%, 0.1%) Photosensitive

materials (1.8%, 0.1%)

Miscellaneous chemical products (7%, 0.6%)

Petrochemical aromatic products (2%, 20.8%)

Methane derivative products (0.2%, 0%)

Synthetic resin (6.1%, 0.4%)

Synthetic fiber (1.3%, 0.6%) Plastics (0.3%, 0%)

Rayon and acetate (0.3%, 0.3%)

0

0.1

0.2

0.3

0.4

0.5

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

[kgC

O2/

US2

010$

]

EU28

US

Japan

UK

Sweden

0

0.1

0.2

0.3

0.4

0.5

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

[kgC

O2/

US2

010$

]

EU28

US

Japan

UK

Sweden

0.50.60.70.80.91.01.11.21.3

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

[Val

ues i

n 20

05=1

.0]

US

Japan

UK

Sweden

0.50.60.70.80.91.01.11.2

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

[Val

ues i

n 20

05=1

.0]

US

Japan

UK

Sweden

2.4 Comparison of CO2 emissions per GDP (intensity)34

• CO2 intensity of Japan increased after the Earthquake, but almost the same level as that in EU28 average or UK after 2011 when comparing by using consumption-based CO2 intensity in US$ (left below)

• Decrease in intensity of Japan tends to be smaller than other regions when comparing by using production-based CO2 in local currency basis(upper right). On the other hand, when comparing by using consumption-based CO2 intensity (right below), Japan’s trend is much the same as other regions except for emissions increase due to nuclear shutdown after the Earthquake,

Production-based CO2/GDP [2010US$] Production-based CO2/GDP [2010 local currency basis]<Normalization at 2005=1.0>

Consumption-based CO2/GDP [2010US$] Consumption-based CO2/GDP [2010 local currency basis]<Normalization at 2005=1.0>

Note: IEA statistics for US$GDP, WDI2018 for local currency

2.5 Comparison by region: Difference between production-based CO2emissions and consumption-based CO2 emissions during 2000-2014 35


Net CO2emissions imports:Consumption-based emissionshigher than production-based emissions

Net CO2emissions exports:Consumption-based emissions lower than production-based emissions

Difference: [consumption-based CO2 emissions] – [production-based CO2 emissions]

Reference: OECD(2015) analysis (Note: time point is not same as above)

Note: Rearranged regional classification of OECD(2015) to above

-2000

-1500

-1000

-500

0

500

1000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

[Con

sum

ptio

n-ba

sed]

-[Pro

duct

ion-

base

d](M

tCO

2)

US

EU

Japan

Other developedregionsRussia

China

India

Rest of the world

China

Russia

EU

USJapan

India

-2000

-1500

-1000

-500

0

500

1000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

[Con

sum

ptio

n-ba

sed]

-[Pro

duct

ion-

base

d](M

tCO

2)

US

EU

Japan

Other developedregionsRussia

China

India

Rest of the world

China

Russia

EUUS

Japan

India

3. Conclusion

Conclusion37

In this analysis, we estimated consumption-based CO2 emissions of major regions during 2000-2014 in time-series and compared them with production-based CO2 emissions to examine decoupling between economic growth and CO2 emissions. Decoupling has been seemingly observed in some nations in EU (such as

Sweden or UK) or EU average, but our estimates show that deepened foreign-dependency of these nations on imports, which is caused by shifts in industrial structure, has a significant impact. CO2 emissions embodied in their imports are so large that their contribution to the global emissions reduction seem to be minor. (In terms of policy aspects, their economic growth might have been achieved through the integration of EU as well as increase of immigrants, unlikely to be an effect of EU ETS).

Improvement of production-based CO2 intensity seems to be modest in Japan, which reflects its maintaining manufacturing industries relatively more than EU or US. Meanwhile, there are little or no differences from EU or US when comparing the improvement in CO2 intensity by using consumption-based CO2 (and excluding the impact of its dependency on fossil-fuel power generation due to nuclear shutdown after the Earthquake).

Appendix 1Overview of global CO2 emissions and

energy supply

-6.0-4.0-2.00.02.04.06.08.0

1971

-197

2

1972

-197

3

1973

-197

4

1974

-197

5

1975

-197

6

1976

-197

7

1977

-197

8

1978

-197

9

1979

-198

0

1980

-198

1

1981

-198

2

1982

-198

3

1983

-198

4

1984

-198

5

1985

-198

6

1986

-198

7

1987

-198

8

1988

-198

9

1989

-199

0

1990

-199

1

1991

-199

2

1992

-199

3

1993

-199

4

1994

-199

5

1995

-199

6

1996

-199

7

1997

-199

8

1998

-199

9

1999

-200

0

2000

-200

1

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

2006

-200

7

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

2011

-201

2

2012

-201

3

2013

-201

4

2014

-201

5

2015

-201

6

2016

-201

7Annu

al g

row

th ra

te (%

/yea

r)

POP

GDP/POP

PES/GDP

CO2/PES

CO2

Appendix 1-1：Factorial decomposition of global CO2emission（energy-related; 1971-2017）（Kaya identity） 39

In the long-term trend of global emissions there is no major change in the trend of energy saving（PES/GDP）[include industrial structural change] and decarbonization (CO2/PES) in the 2010s.

73: The first oil crisis78: The second oil crisis 08：financial crisis

By year

-4.0-3.0-2.0-1.00.01.02.03.04.05.0

1971

-198

0

1980

-199

0

1990

-200

0

2000

-201

0

2010

-201

7

2010

-201

1

2011

-201

2

2012

-201

3

2013

-201

4

2014

-201

5

2015

-201

6

2016

-201

7

Annu

al g

row

th ra

te (%

/yea

r)

POP

GDP/POP

PES/GDP

CO2/PES

CO2

Note:Based on IEA emission database (2017). GDP is in constant 2010 market price. For 2016～17 The data of CO2 / PES (IEA –GECO2017); GDP(IMF2018Aprl); POP (UN2017)

Appendix 1-2： Regional contributions of global CO2emission（energy-related; 1971-2017） 40

Note: IEA CO2 emission database (2017) 2016, 2017 CO2 is from (IEA –GECO2017). In IEA –GECO2017, only US, China and global emission data is reported.

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.019

7119

7319

7519

7719

7919

8119

8319

8519

8719

8919

9119

9319

9519

9719

9920

0120

0320

0520

0720

0920

1120

1320

1520

17

Ener

gy-r

elat

ed C

O2

(GtC

O2)

Rest of the world

US

China

-1.0-0.50.00.51.01.52.02.53.03.5

1971

-198

0

1980

-199

0

1990

-200

0

2000

-201

0

2010

-201

7

2010

-201

1

2011

-201

2

2012

-201

3

2013

-201

4

2014

-201

5

2015

-201

6

2016

-201

7Annu

al g

row

th ra

te (%

/yea

r)

Rest of the world

US

China

World CO2

After 2010, the contributions of US and China are increasing.

Appendix 1-3: The relationship between global economy growth and primary energy supply 41

Similar to CO2 emission, Primary energy supply is positively correlated with global GDP.

Note:Based on IEA emission database (2017). GDP is in constant 2010 market price. For 2016～17 The data of CO2 / PES (IEA –GECO2017); GDP(IMF2018Aprl).

Global primary energy supply(1971-2017)

Soure:IEA-GECO2017

Source :IEA-GECO2017

Change of global energy demand in 2016 and 2017

Change of global coal demand in 2016 and 2017

According to IEA-GECO2017, China and US contributed the decline of coal demand in 2015 and 2016.

5000

6000

7000

8000

9000

10000

11000

12000

13000

14000

15000

15 25 35 45 55 65 75 85Prim

ary

ener

gy s

uppl

y(M

toe/

yr)

GDP (Trillion US$/yr)

2015年2010年

1971-2015年の間の実績値

の線形回帰式y = 145.71x + 2991R² = 0.9948

2017年

1971年

2000年

Y1971

Y2000

linear regression equation (1971-2015)

Y2010Y2015

Y2017

Appendix 2: Preconditions and methods of estimating

consumption-based CO2 emission

Method for estimating consumption-based CO2 emission43

Consumption-based CO2 emission（ConsCO2） function:(based on Peters et al.(2008))：ConsCO2(r)= EF(r)・ (I－(I － M(r))A(r))-1 ・(1-M(r))(C(r)＋I(r)) ＋ ImCO2(r) ＋ RCO2(r) (1)

r, s: country/regionI： Unit MatrixA: Input coefficient matrixM: Import coefficient matrixEF: CO2 emission factor for each sector(CO2/output for sector i)C: Final demand（household+ government）I: InvestmentImCO2：CO2 emissions embodied in importsRCO2: Direct emission by householdEx：ExportIm: Import

ImCO2(r)＝Σ(s) ｛L(s)・ Ex(s,r)｝ (＝Σ(s) ｛L(s)・ Im(r,s)｝ ) (2)

Where L(r)=EF(r)・ (I－(I － M(r))A(r))-1,

CO2 emission from domestic goods/ final demand CO2 emission from import goods/domestic consumption

Direct emission by household

← aggregated CO2 emission embodied in the trading goods from region s(exporter) to region r (importer)

The relationship between consumption-based CO2 emission（ConsCO2） and production-based CO2 emission(ProdCO2) :ConsCO2(r)=ProdCO2(r)＋ImCO2(r)－ExCO2(r)

(3)ExCO2(r)＝Σ(r) ｛L(r)・ Ex(r,s)｝

ConsCO2(r)－ProdCO2(r)＝ImCO2(r)－ExCO2(r) (4)

・ The production-based CO2 emissions （by industry sector） use the database of IEA (CO2emission from fossil fuel combustion, 2017) . Consumption-based CO2 emissions is estimated with Input-output table. The calculation method is described below:

Data assumption for estimating consumption-based CO2 emissions(1) 44

The amount of CO2 emission: Country/ sector emission data from IEA-CO2 database (2017) is used in this study

(Following Davis&Caldeira (2010), exclude international transport）。 If sector emission is zero in the database, the estimated emission is calculated with

sectoral production and emission factors. Emissions from coke oven and blast furnace are included in the steel sector（The

emissions from by-product electricity are included in the electricity sector）。

The economic data: WIOD2016 (World Input-Output Database） is applied in this research

2000-2014 annual nominal data(USD) 44 regions（43countries+others） 56 sectors(According to International Standard Industrial Classification) basic price (tax is excluded)

Page 45 presents the industrial classification and Page 46 presents the classification by region. The overall economy is classified into 16 sectors and household in order to fit in the IEA emission database.

* *http://www.wiod.org/database/wiots16

Data assumption for estimating consumption-based CO2emissions(2) 45

＜Correspondence table of industrial classification ＞WI OT sect or cl assi f i cat i on WI OT sect or cl assi f i cat i onCr op and ani mal pr oduct i on, hunt i ng and r el at ed ser vi ce act i vi t i es Wat er col l ect i on, t r eat ment and suppl yFor est r y and l oggi ng Sewer age; wast e col l ect i on, t r eat ment and di sposal act i vi t i es; mat er i al s

r ecover y; r emedi at i on act i vi t i es and ot her wast e management ser vi cesFi shi ng and aquacul t ur e Whol esal e and r et ai l t r ade and r epai r of mot or vehi cl es and mot or cycl es

Sec02 Mi ni ng Mi ni ng and quar r yi ng Whol esal e t r ade, except of mot or vehi cl es and mot or cycl es

Sec03 Foodmanuf act ur i ng Manuf act ur e of f ood pr oduct s, bever ages and t obacco pr oduct s Ret ai l t r ade, except of mot or vehi cl es and mot or cycl es

Manuf act ur e of paper and paper pr oduct s Post al and cour i er act i vi t i es

Pr i nt i ng and r epr oduct i on of r ecor ded medi a Accommodat i on and f ood ser vi ce act i vi t i es

Sec05 Text i l emanuf act ur i ng Manuf act ur e of t ext i l es, wear i ng appar el and l eat her pr oduct s Publ i shi ng act i vi t i es

Sec06Coal and

pet r ol eummanuf act ur i ng

Manuf act ur e of coke and r ef i ned pet r ol eum pr oduct s Mot i on pi ct ur e, vi deo and t el evi si on pr ogr amme pr oduct i on, sound r ecor di ngand musi c publ i shi ng act i vi t i es; pr ogr ammi ng and br oadcast i ng act i vi t i es

Manuf act ur e of chemi cal s and chemi cal pr oduct s Tel ecommuni cat i onsManuf act ur e of basi c phar maceut i cal pr oduct s and phar maceut i calpr epar at i ons

Comput er pr ogr ammi ng, consul t ancy and r el at ed act i vi t i es; i nf or mat i onser vi ce act i vi t i es

Manuf act ur e of r ubber and pl ast i c pr oduct s Fi nanci al ser vi ce act i vi t i es, except i nsur ance and pensi on f undi ng

Sec08

Ot her non-met al l i cmi ner al

manuf act ur i ng

Manuf act ur e of ot her non-met al l i c mi ner al pr oduct s I nsur ance, r ei nsur ance and pensi on f undi ng, except compul sor y soci alsecur i t y

Sec09 Basi c met almanuf act ur i ng Manuf act ur e of basi c met al s Act i vi t i es auxi l i ar y t o f i nanci al ser vi ces and i nsur ance act i vi t i es

Manuf act ur e of f abr i cat ed met al pr oduct s, except machi ner y and equi pment Real est at e act i vi t i esManuf act ur e of comput er , el ect r oni c and opt i cal pr oduct s Legal and account i ng act i vi t i es; act i vi t i es of head of f i ces; management

consul t ancy act i vi t i esManuf act ur e of el ect r i cal equi pment Ar chi t ect ur al and engi neer i ng act i vi t i es; t echni cal t est i ng and anal ysi sManuf act ur e of machi ner y and equi pment n. e. c. Sci ent i f i c r esear ch and devel opment

Manuf act ur e of mot or vehi cl es, t r ai l er s and semi -t r ai l er s Adver t i si ng and mar ket r esear ch

Manuf act ur e of ot her t r anspor t equi pment Ot her pr of essi onal , sci ent i f i c and t echni cal act i vi t i es; vet er i nar yact i vi t i es

Manuf act ur e of wood and of pr oduct s of wood and cor k, except f ur ni t ur e;manuf act ur e of ar t i cl es of st r aw and pl ai t i ng mat er i al s Admi ni st r at i ve and suppor t ser vi ce act i vi t i esManuf act ur e of f ur ni t ur e; ot her manuf act ur i ng Publ i c admi ni st r at i on and def ence; compul sor y soci al secur i t yRepai r and i nst al l at i on of machi ner y and equi pment Educat i on

Sec13 Const r uct i on Const r uct i on Human heal t h and soci al wor k act i vi t i es

Sec14 El ect r i ci t y andgas El ect r i ci t y, gas, st eam and ai r condi t i oni ng suppl y Ot her ser vi ce act i vi t i es

Land t r anspor t and t r anspor t vi a pi pel i nes Act i vi t i es of househol ds as empl oyer s; undi f f er ent i at ed goods- andser vi ces-pr oduci ng act i vi t i es of househol ds f or own use

Wat er t r anspor t Act i vi t i es of ext r at er r i t or i al or gani zat i ons and bodi esAi r t r anspor tWar ehousi ng and suppor t act i vi t i es f or t r anspor t at i on

Sec15 Tr anspor t

Sec10 Machi ner ymanuf act ur i ng

Sec11Tr anspor t at i on

equi pmentmanuf act ur i ng

Sec12 Ot hermanuf act ur i ng

Sect or cl assi f i cat i onassumed i n t hi s st udy

Sect or cl assi f i cat i onassumed i n t hi s st udy

Sec01 Agr i cul t ur e

Sec16 Ser vi ce

Sec04 Paper and pul pmanuf act ur i ng

Sec07 Chemi calmanf act ur i ng

Regi ons assumedi n t hi s st udy WI OT r egi ons Regi ons assumed

i n t hi s st udy WI OT r egi ons

US Russi a RUSAUT HUN Chi na CHNBEL I RL I ndi a I NDBGR I TA BRACYP LTU I DNCZE LUX KORDEU LVA MEXDNK MLT TURESP NLD TWNEST POL ROWFI N PRTFRA ROUGBR SVKGRC SVNHRV SWE

J apanDevel oped

r egi ons

AUSCANCHENOR

USA

EU28Rest of t he

wor l d

JPN

Data assumption for estimating consumption-based CO2emissions(3) 46

＜Correspondence table for regions＞

In WIOT, reset countries (around 150 countries) are aggregated as “rest of the world (ROW)”

-1800

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Diffe

renc

es o

f CO

2em

issio

ns (M

tCO

2)

CO2

emiss

ions

(MtC

O2)

Production-based CO2 emissions

Consumption-based CO2 emissions

Differences (=[Consumption-based] - [Production-based])[Right axis]

+193%

+187%

China and India：Production/Consumption-based CO2emission（2000-2014） 47

Note: Production-based CO2 emission：IEA emission database (2017); consumption based CO2 estimation is based on Peters et al.(2009) using WIOD 2016.

China

India

China: The gap between consumption-based and production-based emission became larger until 2007（the CO2 emission embodied in exports increased）.After 2010, the gap became smaller/ flat.

India: The gap between consumption-based and production-based emission declined before 2010. However, after 2011, the gap increased.

-160

-140

-120

-100

-80

-60

-40

-20

0

20

0

500

1,000

1,500

2,000

2,500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Diffe

renc

es o

f CO

2em

issio

ns (M

tCO

2)

CO2

emiss

ions

(MtC

O2)

Production-based CO2 emissions

Consumption-based CO2 emissions

Differences (=[Consumption-based] - [Production-based]) [Right axis]

+127%+123%

-30%

-25%

-20%

-15%

-10%

-5%

0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014Di

ffere

nces

of C

O2

emiss

ions

[Con

sum

ptio

n-ba

sed]－

[Pro

duct

ion-

base

d](%

, rel

ativ

e to

pro

duct

ion-

base

d)

－11.7pp

－1.9pp

-8%-7%-6%-5%-4%-3%-2%-1%0%1%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014Di

ffere

nces

of C

O2

emiss

ions

[Con

sum

ptio

n-ba

sed]－

[Pro

duct

ion-

base

d](%

, rel

ativ

e to

pro

duct

ion-

base

d)

－1.4pp


Appendix3：Trends in exports of Chinese machinery / transport machinery (2000-2014) 48

Note：Estimated with WIOT

Export to U.S.

Export to EU

Export to Japan

0

20

40

60

80

100

120

140

160

180

200

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Expo

rt (B

illio

n$) Manufacture of other transport equipment

Manufacture of motor vehicles, trailers andsemi-trailers

Manufacture of machinery and equipmentn.e.c.

Manufacture of electrical equipment

Manufacture of computer, electronic andoptical products

0

20

40

60

80

100

120

140

160

180

20020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Expo

rt (B

illio

n$)

Manufacture of other transport equipment

Manufacture of motor vehicles, trailers andsemi-trailers




0

10

20

30

40

50

60

70

80

90

100

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Expo

rt (B

illio

n$)

Manufacture of other transportequipment

Manufacture of motor vehicles, trailersand semi-trailers




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