Determinants of the changes in the elasticity of CO2 emissions in Iran

Azami, Somayeh; Mohammadi, Zahra

doi:10.22055/jqe.2022.39686.2457

Determinants of the changes in the elasticity of CO2 emissions in Iran

https://doi.org/10.22055/jqe.2022.39686.2457

Volume 19, Issue 1 - Serial Number 72

Vol. 19, No. 1, Spring 2022 (Serial number 72)

Spring 2022

Pages 127-164

Quarterly Journal of Quantitative Economics (JQE)

Document Type : Review/Research Article

Authors

somayeh azami ¹

Zahra Mohammadi ²

¹ Associate Professor of Economics, Department of Economics, Faculty of Social Sciences, Razi University, Kermanshah, Iran

² Master of Economics, Department of Economics, Faculty of Social Sciences, Razi University, Kermanshah, Iran.

Abstract

EXTENDED ABSTRACT
INTRODUCTION
In 2019, Iran is ranked sixth among world countries and fifth among Asian countries (including Russia) in terms of CO₂ emissions. Therefore, studying the CO₂ emission elasticity of the production sectors of this country is significant and important for energy and environmental policymakers. What factors influence changes in CO₂ emission elasticities? Which are the stimulants and which are the inhibators? The answers to these questions are useful in reducing and controlling CO₂ emissions. In the present study, CO₂ emission elasticities of production sectors are calculated, and then, with the aim of identifying CO₂ emission elasticity stimuli, the changes in CO₂ emission elasticities are broken down into different components. The methodology of this research is based on Input-Output analysis and decomposition analysis. The novelty of this paper is to determine and calculate the components of changes in CO₂ emission elasticities using SAD. Guo et al. (2018) have presented a method for calculating CO₂ emission elasticities based on the Input-Output analysis.
METHODOLOGY
Aim of this paper is to investigate the factors affecting CO₂ emission elasticities, CO₂ emission demand elasticity and CO₂ emission production elasticity. In the first step, the elasticities are calculated and in the second step, changes of elasticities are decomposed. In this study, we have used input-output tables published in 2001 and 2011 by the Statistics Center of Iran. Due to the differences in the sector classification of the input-output tables of 2001 and 2011, we match some production sectors and finally take into account the 65 unified sectors. In order to calculate the CO₂ emission of each production sector, we first obtain the total consumption of each energy for each year from the Iranian energy balance sheet, and then we allocate each energy consumption to production sectors and single household sector, according to input-output tables and the share of production sectors and the share of the household sector.
FINDINGS
Findings show that the "Electricity generation, transmission, and distribution" sector has the most elasticity. The "Ghosh inverse matrix" effect is a strong stimulus to the CO₂ emission elasticity of the sectors. This result indicates that the change in the share of output i, which is sold to sector j as an intermediate input, is a strong stimulus to increase the elasticity of CO₂ emissions. These changes can be due to increased economic activities and the inefficiency of production structure.

CONCLUSION
"Electricity generation, transmission and distribution" sector should be considered by energy and environmental policy makers due to having the highest amount and changes in CO₂ emission elasticity than other sectors. Increasing the share of renewable energy in the energy consumption basket of production sectors, increasing energy efficiency (reducing energy intensity) by replacing new and advanced equipment with old and worn equipment and improving production structure can help reduce the CO₂elasticity and CO₂ emission in Iran's production sectors. Finally, due to the high of CO₂ emission elasticities in the "Electricity generation, transmission and distribution" sector, future research can focus on this area and suggest solutions to increase production efficiency and energy efficiency. Also, future research can focus on the production structure of production sectors and provide solutions to improve the production structure of Iran's production sectors.

Keywords

CO2 emission elasticity

energy consumption

Input-Output analysis

decomposition analysis

Subjects

Environmental, Resource and Energy Economics

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