Skip to main content

Advertisement

SpringerLink
Log in

Persistence and unit root in \(\text {CO}_{2}\) emissions: evidence from disaggregated global and regional data

  • Published:
Empirical Economics Aims and scope Submit manuscript

Abstract

Understanding the properties of \(\text {CO}_{2}\) emissions is crucial in designing and implementing policies in the battle against climate change and global warming. One of the main characteristics of the \(\text {CO}_{2}\) emissions that needs to be examined is the degree of persistence of the emissions. This study examines the degree of persistence in aggregated and disaggregated \(\hbox {CO}_{2}\) emissions at the global and regional levels. The results from the subsampling confidence intervals show that the \(\text {CO}_{2}\) emissions, regardless of aggregation level, are highly persistent and non-stationary. Therefore, even a transitory shock will have a permanent effect on the emission of \(\text {CO}_{2}.\) The same is true for \(\text {CO}_{2}\) emissions due to cement production and fuel consumption (gas, liquid, and solid). On the other hand, emissions from gas flaring appear to be stationary in most cases. In addition, the results show that emissions in the Middle East exhibit higher degrees of persistence compared to global emissions and emissions in Western Europe.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. In principle, these shocks could result from the policies that change the fuel efficiency, the combination of fuels, the prices of energy carriers, the environmental law, and so on.

  2. Note that \(\alpha \) is the coefficient of the lagged dependent variable in the augmented Dickey–Fuller regression.

  3. The cumulative impulse response is a tool that summarizes the information of the impulse response function into a scalar.

  4. It is necessary to know the properties of the global and regional emissions to make sure that regulatory markets such as the Kyoto Protocol and the EU ETS (the EU emissions trading system) can result in a significant and prolonged effect.

  5. Brazil, Russia, India, China, and South Africa.

  6. Canada, France, Germany, Great Britain, Italy, Japan, and the USA.

  7. This measure has been used by many scholars to measure the persistence (see, inter alia, Andrews and Chen 1994; Mishkin 2007; Chinn and Wei 2013; Beck et al. 2016; Fallahi et al. 2016).

  8. In other words, the confidence interval will have a size distortion and the actual size will not match the nominal size (Patterson 2011).

  9. Note that these approaches, by resampling blocks or subsamples of data, retain the possible dependence structure of the observed data.

  10. See Politis et al. (1999) for details.

  11. \(\alpha \) measures the closeness of the process to non-stationarity (Andrews and Chen 1994).

  12. It has shown by Romano and Wolf (2001) that the appropriate value for this normalization constant is \(T^{0.5}\), where T is the sample size.

  13. They have used historical energy statistics to estimate the global, regional, and national fossil fuel \(\text {CO}_{2}\) emissions back to 1751. The data can be downloaded from http://cdiac.ess-dive.lbl.gov/trends/emis/overview.html. In this paper, we use the global and regional data.

  14. These are the five main components of the aggregate \(\text {CO}_{2}\) emissions.

  15. It is worth noting that these two groups of countries differ from each other in different aspects. Western European countries have the most extensive environmental laws and mechanisms, such as the European Union Emissions Trading System, while many of Middle Eastern countries do not have well-established or effective environmental laws (see Camarero et al. 2014 for details). In addition, while Western European countries have a high dependency on energy imports, most Middle Eastern countries are energy exporters. All of this can affect the degree of persistence in \(\text {CO}_{2}\) emissions.

  16. Data on global \(\text {CO}_{2}\) emission and \(\text {CO}_{2}\) emission in Western Europe were available from 1751, but the data for the Middle East are only available from 1865; therefore, we used a common sample for the total \(\text {CO}_{2}\) from 1865 to 2013.

  17. The first decline possibly corresponds to the energy crises in the 1970s, and the decline in 2006 could be the result of economic crises and decline in GDP.

  18. Gas flaring can be reduced in different ways, such as liquefying to natural gas and re-injecting into the ground (Bassey 2008).

  19. We use the results from these standard unit root tests only as a benchmark, as our main intention is to gain insight into the persistence using confidence intervals. Hence, we do not consider other unit root tests available in the literature.

  20. The same lag lengths are used in the unit root tests.

  21. As per recommendation of Romano and Wolf (2001) we set \(c_{1}=1,\)\(c_{2}=3\), and \(\eta =0.5\).

  22. It is important to note that the presence of structural breaks in the series does not affect the results from subsampling confidence intervals, because in the subsampling methods we take several blocks from the whole sample and estimate a confidence interval for every single block. The presence of break points will affect only a few of the constructed CIs. These few CIs will only affect the lower and upper ends of the approximated distribution, which will be discarded in the final stage of constructing the 95% confidence intervals.

  23. The only exceptions are flaring in North America and Oceania, which now appear to be stationary with roots close to one.

References

  • Aldy J (2006) Per capita carbon dioxide emissions: convergence or divergence? Environ Resour Econ 33:533–555

    Google Scholar 

  • Andrews D, Chen WK (1994) Approximately median-unbiased estimation of autoregressive models. J Bus Econ Stat 12:187–204

    Google Scholar 

  • Andrews DWK (1993) Exactly median-unbiased estimation of first order autoregressive unit root models. Econometrica 61:139–65

    Google Scholar 

  • Barros CP, Gil-Alana LA, Prez de Garcia EP (2016) Stationarity and long range dependence of carbon dioxide emissions: evidence for disaggregated data. Environ Resour Econ 63:45–56

    Google Scholar 

  • Barassi MR, Cole MA, Elliott RJR (2011) The Stochastic convergence of \({\rm CO}_{2}\) emissions: a long memory approach. Environ Resour Econ 49:367–385

    Google Scholar 

  • Barassi MR, Cole MA, Elliott RJR (2007) Stochastic divergence or convergence of per capita carbon dioxide emissions: re-examining the evidence. Environ Resour Econ 40:121–137

    Google Scholar 

  • Bassey N (2008) Gas flaring assaulting communities, jeopardizing the world, proceedings at the national environmental consultation, The Environmental Rights Action in Conjunction with the Federal Ministry of Environment, Abuja

  • Beck GW, Hubrich K, Marcellino M (2016) On the importance of sectoral and regional shocks for price-setting. J Appl Econom 31:1243–1253

    Google Scholar 

  • Belbute JM, Pereira AM (2017) Do global \({\rm CO}_{2}\) emissions from fuel consumption exhibit long memory? A fractional integration analysis. Appl Econ 49:4055–4070

    Google Scholar 

  • Boden TA, Marland G, Andres RJ (2017) Global, regional, and national fossil-fuel \({\rm CO}_{2}\) emissions, Carbon dioxide Information Analysis Center, U.S. Department of Energy, USA. https://doi.org/10.3334/CDIAC/00001_V2017

  • Camarero M, Picazo-Tadeo AJ, Tamarit C (2008) Is the environmental performance of industrialized countries converging? A ‘SURE’ approach to testing for convergence. Ecol Econ 66:653–661

    Google Scholar 

  • Camarero M, Castillo-Gimenez J, Picazo-Tadeo AJ, Tamarit C (2014) Is eco-efficiency in greenhouse gas emissions converging among European Union countries? Empir Econ 47:143–168

    Google Scholar 

  • Chang CP, Lee CC (2008) Are per capita carbon dioxide emissions converging among industrialized countries? New time series evidence with structural breaks. Environ Dev Econ 13:497–515

    Google Scholar 

  • Chinn MD, Wei SJ (2013) A faith-based initiative meets the evidence: does a flexible exchange rate regime really facilitate current account adjustment. Rev Econ Stat 95:168–184

    Google Scholar 

  • Chortareas G, Kapetanios G (2013) How puzzling is the PPP puzzle? An alternative half-life measure of convergence to PPP. J Appl Econom 28:435–457

    Google Scholar 

  • Christidou M, Panagiotidis T, Sharma A (2013) On the stationarity of per capita carbon dioxide emissions over a century. Econ Model 33:918–925

    Google Scholar 

  • Delgado MS (2013) A smooth coefficient model of carbon emissions. Empir Econ 45:1049–1071

    Google Scholar 

  • Dinda S, Coondoo D (2006) Income and emission: a panel data-based cointegration analysis. Ecol Econ 57:167–181

    Google Scholar 

  • Duro JA, Padilla E (2013) Cross-country polarisation in \({\rm CO}_{2}\) emissions per capita in the European Union: changes and explanatory factors. Environ Resour Econ 54:571–591

    Google Scholar 

  • Elliot G, Rothenberg T, Stock JH (1996) Efficient tests for an autoregressive unit root. Econometrica 64:813–39

    Google Scholar 

  • Evans P, Kim JU (2016) Convergence analysis as spatial dynamic panel regression and distribution dynamics of \({\rm CO}_{2}\) emissions in Asian countries. Empir Econ 50:729–751

    Google Scholar 

  • Ezcurra R (2007) Is there cross-country convergence in carbon dioxide emissions? Energy Policy 35:1363–1372

    Google Scholar 

  • Fallahi F, Karimi M, Voia MC (2016) Persistence in world energy consumption: evidence from subsampling confidence intervals. Energy Econ 57:175–183

    Google Scholar 

  • Gil-Alana LA, Cunado J, Gupta R (2017) Persistence, mean-reversion and non-linearities in \({\rm CO}_{2}\) emissions: evidence from the BRICS and G7 countries. Environ Resour Econ 67:869–883

    Google Scholar 

  • Hall AD (1994) Testing for a unit root in time series with pretest data based model selection. J Bus Econ Stat 12:461–470

    Google Scholar 

  • Hall P (1988) On symmetric bootstrap confidence intervals. J R Stat Soc 50:35–45

    Google Scholar 

  • Hao Y, Wei Y (2015) When does the turning point in China’s \({\rm CO}_{2}\) emissions occur? Results based on the green solow model. Environ Dev Econ 20:723–745

    Google Scholar 

  • Hansen BE (1999) The grid bootstrap and the autoregressive model. Rev Econ Stat 81:594–607

    Google Scholar 

  • Herrerias MJ (2012) World energy intensity convergence revisited: a weighted distribution dynamics approach. Energy Policy 49:383–399

    Google Scholar 

  • Keating K (1991) Persistence of energy saving. Handbook of energy demand management. US Department of Energy, Tennessee

    Google Scholar 

  • Lanne M, Liski M (2004) Trends and breaks in per-capita carbon dioxide emissions, 1870–2028. Energy J 25:41–65

    Google Scholar 

  • Lee C, Chang C (2009) Stochastic convergence of per capita carbon dioxide emissions and multiple structural breaks in OECD countries. Econ Model 26:1375–1381

    Google Scholar 

  • Lee C-C, Chang CP (2008) New evidence on the convergence of per capita carbon dioxide emissions from panel seemingly unrelated regressions augmented Dickey–Fuller tests. Energy 33:1468–1475

    Google Scholar 

  • Lee C, Lee J (2009) Income and \({\rm CO}_{2}\) emissions: evidence from panel unit root and cointegration tests. Energy Policy 37:413–423

    Google Scholar 

  • Lee J, List JA (2004) Examining trends of criteria air pollutants: are the effects of governmental intervention transitory? Environ Resour Econ 29:21–37

    Google Scholar 

  • Lee J, Strazicich MC (2004) Minimum LM unit root test with one structural break. Working papers 04–17. Department of Economics, Appalachian State University

  • Lee J, Strazicich MC (2003) Minimum Lagrange multiplier unit root test with two structural breaks. Rev Econ Stat 85:1082–1089

    Google Scholar 

  • Li X, Lin B (2013) Global convergence in per capita CO\( _{2}\) emissions. Renew Sustain Energy Rev 24:357–363

    Google Scholar 

  • Liddle B, Messinis G (2018) Revisiting carbon Kuznets curves with endogenous breaks modeling: evidence of decoupling and saturation (but few inverted-Us) for individual OECD countries. Empir Econ 54:783–798

    Google Scholar 

  • McKitrick R, Strazicich MC (2005) Stationarity of global per capita carbon dioxide emissions: implications for global warming scenarios. Working papers 05–03, Department of Economics, Appalachian State University

  • Mikusheva A (2007) Uniform inference in autoregressive models. Econometrica 75:1411–1452

    Google Scholar 

  • Mishkin FS (2007) Inflation dynamics. Int Finance 10:317–333

    Google Scholar 

  • Ng S, Perron P (1995) Unit root tests in ARMA models with data dependent methods for the selection of the truncation lag. J Am Stat Assoc 90:268–281

    Google Scholar 

  • Nourry M (2009) Re-examining the empirical evidence for stochastic convergence of two air pollutants with a pair-wise approach. Environ Res Econ 44:1–16

    Google Scholar 

  • Panopoulou E, Pantelidis T (2009) Club convergence in carbon dioxide emissions. Environ Resour Econ 44:47–70

    Google Scholar 

  • Patterson Kerry (2011) Unit root tests in time series: key concepts and problems. Palgrave MacMillan, New York

    Google Scholar 

  • Politis DN, Romano JP, Wolf M (1999) Subsampling. Springer, New York

    Google Scholar 

  • Politis D, Romano J (1994) The stationary bootstrap. J Am Stat Assoc 89:1303–1313

    Google Scholar 

  • Presno MJ, Landajo M, Gonzalez PF (2018) Stochastic convergence in per capita \({\rm CO}_{2}\) emissions. An approach from nonlinear stationarity analysis. Energy Econ 70:563–581

    Google Scholar 

  • Roach Traves (2013) A dynamic state-level analysis of carbon dioxide emissions in the United States. Energy Policy 59:931–937

    Google Scholar 

  • Romano JP, Wolf M (2001) Subsampling intervals in autoregressive models with linear time trend. Econometrica 69:1283–1341

    Google Scholar 

  • Romero-Avila D (2008) Questioning the empirical basis of the environmental Kuznets curve for \({\rm CO}_{2}\): new evidence from a panel stationarity test robust to multiple breaks and cross-dependence. Ecol Econ 64:559–574

    Google Scholar 

  • Sen A (2003) On unit-root tests when the alternative is a trend-break stationary process. J Bus Econ Stat 21:174–184

    Google Scholar 

  • Sharma S (2011) Determinants of carbon dioxide emissions: empirical evidence from 69 countries. Appl Energy 88:376–382

    Google Scholar 

  • Soytas U, Sari R, Ewing BT (2009) Energy consumption, income, and carbon emissions in the United States. Ecol Econ 62:482–489

    Google Scholar 

  • Strazicich MC, List AL (2003) Are \({\rm CO}_{2}\) emission levels converging among industrial countries? Environ Resour Econ 24:263–271

    Google Scholar 

  • Sun L, Wang M (1996) Global warming and global emission: an empirical study. J Environ Manag 46:327–343

    Google Scholar 

  • Tiwari AK, Kyophilavong P, Albilescu CT (2016) Testing the stationarity of \({\rm CO}_{2}\) emissions series in Sub-Saharan African countries by incorporating nonlinearity and smooth breaks. Res Int Bus Finance 37:527–540

    Google Scholar 

  • Torous W, Valkanov R, Yan S (2004) On predicting stock returns with nearly integrated explanatory variables. J Bus 44:937–66

    Google Scholar 

  • Yavuz NC, Yilanci V (2013) Convergence in per capita carbon dioxide emissions among G7 countries: a TAR panel unit root approach. Environ Resour Econ 54:283–291

    Google Scholar 

  • Westerlund J, Basher SA (2008) Testing for convergence in carbon dioxide emissions using a century of panel data. Environ Resour Econ 40:109–120

    Google Scholar 

  • Zhang XP, Cheng XM (2009) Energy consumption, carbon emissions, and economic growth in China. Ecol Econ 68:2706–2712

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Economics and Management, University of Tabriz, Tabriz, Iran

    Firouz Fallahi

Authors
  1. Firouz Fallahi
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Firouz Fallahi.

Appendix

Appendix

See Fig. 4, Tables 6, 7, 8, 9 and 10.

Fig. 4
figure 4

Trend of \(\text {CO}_{2}\) emissions

Full size image
Table 6 List of countries included in each region
Full size table
Table 7 Descriptive statistics of the \(\text {CO}_{2}\) emissions
Full size table
Table 8 The results from unit root tests
Full size table
Table 9 The estimated 95% symmetric confidence intervals using the lag lengths suggested by the t-sig approach
Full size table
Table 10 The estimated 95% symmetric confidence intervals using the lag lengths suggested by the Bayesian information criterion (BIC)
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Fallahi, F. Persistence and unit root in \(\text {CO}_{2}\) emissions: evidence from disaggregated global and regional data. Empir Econ 58, 2155–2179 (2020). https://doi.org/10.1007/s00181-018-1608-3

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00181-018-1608-3

Keywords

JEL Classification

Search

Navigation