Conference Agenda

This paper investigates the complex relationship between sectoral Total Factor Productivity (TFP) and emission intensity across various economic sectors in Europe. Adopting a two-step approach, we initially estimate sectoral TFP, followed by the creation of a functional form for TFP. This methodology addresses potential endogeneity between emission intensity and TFP. We then estimate the effects of sectoral TFP on emission intensity, taking into account the bidirectional nature of their relationship. The results reveal diverse impacts of R&D, education, and the OECD PMR indicator across sectors. The paper's contribution lies in its nuanced exploration of the interplay between environmental and economic factors, particularly how sectoral efficiencies and policy dynamics shape Europe's emission intensity landscape. Our findings suggest a multifaceted interaction where economic growth, technological advancements, and environmental sustainability are deeply intertwined.

Historically, economic growth has been closely coupled to carbon emissions responsible for climate change, but to stabilize global temperatures, net-zero carbon emissions are necessary. Some economies have begun to reduce emissions while continuing to grow, but whether this decoupling is fast enough to achieve global climate targets remains uncertain. Here we estimate decoupling rates and CO2 emission intensities over the last three decades for over 1600 subnational regions, encompassing 86% of global emissions, using global data on reported economic output and gridded production-based emissions. 30% of regions with available data have fully decoupled, with higher-income and historically carbon intensive regions exhibiting higher rates of decoupling and declining emission intensity. Moreover, sub-national analysis indicates typically greater differences in decoupling rates within national boundaries than between them. Continuing recent rates of decoupling, and even when accounting for observed acceleration via socioeconomic development, less than half of regions would reach net-zero before 2050.

The Belt and Road Initiative (BRI) has spurred massive infrastructure construction and strengthened economic connectivity between partner countries, which exerts monumental challenges to material resources and the environment. While the environmental and resource impacts along the BRI have been extensively studied, an assessment examining the determinants of BRI material consumption from an economic system viewpoint is lacking. To fill this gap, this study proposes a multi-region structural decomposition analysis model to assess the drivers of material footprint in BRI economies. To scrutinize the effects of transitioning economic structures, the effects of domestic and cross-border production activities are separated, the latter of which is further characterized by production technology and sourcing structure. Using global multi-region input-output tables of 2005-2015, this study reveals that cross-border regional sourcing structure boosted BRI material footprint, with rising intermediates sourced from BRI regions substituting those from developed economies in North America and European Union. Strong effects of capital formation in construction and manufacturing sectors are found in driving BRI material footprint growth, which far exceeded that of consumption, especially since 2013. Disparities among different economic groups in terms of major material footprint drivers are also uncovered. Pertinent policy implications including controlling demand levels and upgrading demand structures, facilitating environmental technology improvement in local countries, and establishing stringent governance on material usage are proposed to reduce BRI material pressures.

The literature has long tried to answer the question of the effectiveness of foreign aid in promoting growth among its recipients. In recent decades, foreign assistance has targeted new objectives, and specifically climate objectives. How effective has it been in tackling these new challenges? In the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, international climate transfers to developing countries are described as a necessary tool for addressing both the threat of climate change and the call for international climate justice. In this paper, we investigate three empirical strategies to estimate the effect of international public climate transfers on carbon emissions using the OECD-DAC climate finance data from 2000 to 2020 and covering 155 recipient countries. We first estimate two panel models using the instrumental variable two-stage least squares technique with a shift-share instrument and the two-step system generalised method of moments to address climate transfers endogeneity. We then propose a staggered difference-in-differences setup comparing small and large recipients and using heterogeneity-robust estimators. This strategy accounts for heterogeneity in climate transfers’ effects related to the time and length of their allocation. Our estimations converge to the absence of an effect of international public climate transfers on the recipient countries’ carbon emissions. This result holds when considering different subsamples of recipient countries and is consistent across different accounting definitions of climate transfers.

Using a dynamic factor model with stochastic volatility, we examine the synchronization of temperature and precipitation changes across 166 countries and regions. Firstly, the model allows us to quantify the extent of the increase in global temperatures. Secondly, it offers a unique measure of how each country’s temperatures align with this common global movement, translating into a robust indicator of regional exposure to global warming. Our findings reveal that a common factor explains a significant portion of temperature variance globally, with the largest contribution observed in sub-Saharan Africa, Latin America, and Asia. Additionally, the common factor accounts for the increase in temperature levels across these regions. In contrast, precipitation fluctuations exhibit more localized patterns. We find that countries with higher GDP per-capita have lower exposure to global temperature changes.

In this work we assess the macro-economic effects of climate-induced impacts on labour productivity in the EU sub-national regions. For this purpose, we combine econometric estimates and temperature projections coming from Regional Climate Models with a regionalized version of a Computable General Equilibrium (CGE) model developed for Europe. Climate and socio-economic uncertainty is taken into account by including nine SSP-RCP scenario combinations. The results show that macro-economic losses can be substantial in Southern European regions, bigger than 1% of GDP in most of the scenarios by 2070. Moreover, negative economic effects propagate outside the directly impacted sectors and affect services as well. In some cases, regions belonging to the same country could be at the losing and winning end of climate change, which underlines the relevance of the sub-national detail. This is the case of the Italian regions.

In this paper, we estimate the effect of the staggered adoption of carbon pricing policies around the globe in the period 1990-2017 on per capita CO2 emissions from fossil fuel combustion. We apply various recent econometric techniques that are robust to treatment effect heterogeneity. We find that adopting a carbon tax or a cap-and-trade system reduces per capita emissions by 8 to 12 percent on average in the post-treatment period. Our dynamic treatment effect estimations show that these effects are realized gradually after implementation resulting in a 15 to 25 percent reduction after 10 years. These results have important implications for the design of climate policies and the public acceptability of carbon pricing instruments such as carbon taxes.