Reducing CO2 Emissions

I. Introduction.- 1 Introduction.- 1.1 The Study.- 1.2 The Greenhouse Effect and Global Warming.- 1.2.1 The Natural Greenhouse Effect.- 1.2.2 The Anthropogenic Greenhouse Effect.- 1.2.3 The Evidence for Global Warming.- 1.3 Industrialisation and the Control of Nature.- 1.4 The Difficulty of Political Implementation of CO2 Targets.- 1.4.1 Wish and Will: The Need for Consensus.- 1.4.2 Reductions in CO2 Emissions: Local, National and Global Levels.- 1.5 Practical Implementation of CO2 Reduction.- 1.6 The Contents of the Book.- 2 Concepts and Methods for the Study.- 2.1 Introduction.- 2.2 Our Point of Departure.- 2.3 The CO2 Problem.- 2.4 General Principles for Ecological Economic Modelling.- 2.4.1 Empirical Foundations.- 2.4.2 Time.- 2.4.3 Natural Boundary Conditions.- 2.4.4 Non-Linear Relationships.- 2.4.5 Production.- 2.4.6 Demand.- 2.4.7 Quantities and Prices.- 2.4.8 Modelling Ex Post and Ex Ante.- 2.5 Our Aims.- 2.6 Our Method.- II. Understanding CO2 Emissions.- 3 The Problem of Climate Change and CO2 Emissions.- 3.1 Introduction.- 3.2 The Nature of the Problem.- 3.3 The Evidence.- 3.3.1 Global Greenhouse Gas Emissions.- 3.4 Historical Trends.- 3.4.1 Conversion Units.- 3.4.2 Data on Energy Use, CO2 Emissions and GDP.- 3.5 Review of CO2 Modelling in the Economics Literature.- 3.5.1 Factors Determining CO2 emissions.- 3.5.1.1 Output and Population Growth.- 3.5.1.2 Energy Efficiency.- 3.5.1.3 Energy Price.- 3.5.1.4 Back-Stop Technologies.- 3.5.2 Key Determinants of the Costs of Abating GHG Emissions.- 3.5.3 Emission Reduction Scenarios.- 3.5.3.1 Reduction Targets.- 3.5.3.2 Policy Instruments.- 3.5.3.3 Growth Effects.- 3.6 Outlook and Conclusions.- 4 Decomposing the Rate of Change of CO2 Emissions.- 4.1 Introduction.- 4.2 Understanding the Time Structure of CO2 Emissions.- 4.2.1 The Influential Variables.- 4.3 CO2 Emissions as a Product of Several Variables.- 4.4 Decomposing the Components of CO2 Emission Changes.- 4.4.1 Necessary Extensions to the Technique.- 4.5 The Rates of Change of CO2 Emissions.- 4.6 Conclusions.- A4 Appendix: Decomposition with Differencing.- A4.1 Introduction.- A4.2 The Differential Approach to Decomposition.- A4.3 Approximating the Differential with the Difference.- A4.4 Resolving Ambiguity: Forward, Backward and Central Differences.- A4.5 Calculating the Differencing Remainder Term.- A4.6 Differencing Error-Prone Empirical Data.- 5 CO2 Emissions by Germany and the UK.- 5.1 Introduction.- 5.2 Energy Use, CO2 Emission and GDP for Germany and the UK.- 5.2.1 Data Sources.- 5.2.2 The CO2/Energy Ratio and the Fuel Mix.- 5.3 Energy Use and GDP.- 5.4 Energy Use and CO2 Emission by Fuel Types.- 5.5 Energy Use and CO2 Emission by Households and in Production.- 5.6 Production CO2 Emission by Sector.- 5.7 Decomposition of German and UK CO2 Emission Changes.- 5.7.1 Decomposition of Total CO2 Emissions Changes.- 5.7.2 Decomposition of Production CO2 Emissions Changes.- 5.7.3 Decomposition of Households CO2 Emissions Changes.- 5.7.4 Decomposition of Total CO2 Emissions Changes.- 5.8 Sectoral Decomposition of CO2 Emissions Changes.- 5.8.1 Decomposition of Overall Rates of Change of CO2 Emission by Sectors.- 5.8.2 Decomposition of Aggregate CO2 Emission Changes.- 5.8.3 A Full Sectoral Decomposition of UK Production CO2 Emissions Changes.- 5.9 Conclusions.- III. Modelling Approach.- 6 A Framework for Modelling Production.- 6.1 Introduction.- 6.2 Invention, Innovation and Irreversibility.- 6.3 Activity Analysis vs. Production Functions.- 6.4 Activity Analysis and Input-Output Analysis.- 6.4.1 Input-Output Analysis and National Accounting.- 6.4.2 Activity Analysis and Dynamics.- 6.5 Input-Output Approaches versus General Equilibrium Models.- 6.6 Conclusions.- 7 Input-Output Methods.- 7.1 Introduction.- 7.2 Inter-Industry Trading and Input-Output Tables.- 7.2.1 A Two Sector Input-Output Model.- 7.2.2 Activity Analysis as the Production Assumption.- 7.2.3 Output Structure in Equation Form.- 7.3 Matrix Representation.- 7.3.1 The Unit Matrix and Matrix Inversion.- 7.3.2 Solving Simultaneous Equations in Matrix Form.- 7.4 The Input-Output Model in Matrix Form.- 7.4.1 Reconstructing the Input-Output Table.- 7.5 Decomposing Direct and Indirect Effects.- 7.6 Prices in Input-Output Models.- 7.6.1 Values and Prices in Input-Output Tables.- 7.7 Constructing Input-Output Tables from Value-Based Data.- 7.7.1 Deflating Input-Output Coefficients.- 7.8 Input-Output Tables and National Accounts.- 8 The Analysis of CO2 Emissions with Input-Output Methods.- 8.1 Introduction.- 8.2 The Input-Output Assessment of CO2 Emissions.- 8.2.1 An Input-Output Model of Production CO2 Emissions.- 8.2.2 An Input-Output Model of Final Demand CO2 Emissions.- 8.2.3 Production CO2 Emissions from Non-Fossil Fuel Sources.- 8.2.4 An Equation for Total CO2 Emissions.- 8.3 Comparing CO2 Emissions Over Time and Between Countries.- 8.4 Imports, Exports and ‘Attributable’ CO2 Emissions.- 8.4.1 Exports and the Attribution of CO2 Emissions.- 8.4.2 Imports and the Attribution of CO2 Emissions.- 8.4.3 Calculating CO2 Emission in a 2-Region, n-Sector Economy.- 8.5 The Sensitivity of CO2 Emissions to Changed Parameters.- 8.5.1 The Elasticities of CO2 Emission with the Parameters.- 8.5.2 The Derivative of CO2 Emission with Respect to aij.- 8.5.3 The Derivative of CO2 Emissions with Respect to cif.- 8.5.4 The Derivative of CO2 Emissions with Respect to pif.- 8.5.5 The Derivative of CO2 Emissions with Respect to yi.- 8.5.6 The Elasticities of CO2 Emissions.- 8.5.7 The Elasticities of CO2 Emissions with Respect to aj and ai.- 8.6 Conclusions.- IV. Data Analysis.- 9 German and UK Input-Output Data for Studying CO2 Emissions.- 9.1 Introduction.- 9.2 The Data Requirements.- 9.3 Data Collection and Processing.- 9.3.1 The Aggregation of the Input-Output Tables.- 9.4 Data Sources Used.- 9.4.1 Production of the A Matrices for Germany.- 9.4.2 Production of the A Matrices for the UK.- 9.4.3 Production of the C Matrices for Germany.- 9.4.4 Production of the C Matrices for the UK.- 9.4.5 Production of the P Matrices for Germany.- 9.4.6 Production of the P Matrices for the UK.- 9.4.7 Production of the Z Matrices for Germany.- 9.4.8 Production of the Z Matrices for the UK.- 9.4.9 Production of the e Vector for Germany.- 9.4.10 Production of the e Vector for the UK.- 9.4.11 Production of the m Vectors for Germany.- 9.4.12 Production of the m Vectors for the UK.- 9.4.13 Production of the B Matrices for Germany.- 9.4.14 Production of the B Matrices for the UK.- 9.4.15 Production of the u Vectors and Y for Germany.- 9.4.16 Production of the u Vectors and Y for the UK.- 9.4.17 Further Adjustment of the UK Data.- 9.5 The Structure of CO2 Emission: Germany 1988.- 9.5.1 The Nature of Input-Output Data.- 9.5.2 The Basic Data Used in the Analysis.- 9.5.3 The CO2 Intensities.- 9.5.4 Attributed CO2 Emissions.- 9.5.5 CO2 Intensities and Emissions by Sector.- 9.5.6 CO2 Emission Elasticities.- 9.6 Conclusions.- 10 Input-Output Analysis of German and UK CO2 Emissions.- 10.1 Introduction.- 10.2 Attribution of CO2 Emissions by Germany and the UK.- 10.3 Imports and Exports: CO2 Emission and Responsibility.- 10.4 Changes in CO2 Emission over Time.- 10.4.1 The Full Sectoral Decomposition.- 10.4.2 The Aggregate Decomposition.- 10.5 Differences in CO2 Emissions between Germany and the UK.- 10.6 Conclusions.- A10 Appendix: Decomposition of Changes in CO2 Emissions.- A10.1 Introduction.- A10.2 Tables.- V. Scenarios.- 11 Scenario Simulations.- 11.1 Introduction.- 11.2 Changing the Structure of Final Demand.- 11.2.1 Final Demand for Non-Fuel Goods.- 11.2.2 Final Demand for Fuels.- 11.2.3 From Private to Public Transport.- 11.2.4 Simulation Results.- 11.2.5 Conclusion.- 11.3 Changing the Energy Efficiency.- 11.3.1 Efficiency of Industrial Fuel Use.- 11.3.1.1. Electricity Generation.- 11.3.1.2 Iron and Steel Industry.- 11.3.1.3 Building Materials Industry.- 11.3.1.4 Food Processing Industry.- 11.3.1.5 Simulation Results.- 11.3.2 Efficiency of Direct Final Demand Fuel Use.- 11.3.2.1 Housing Insulation.- 11.3.2.2 Household Appliances.- 11.3.2.3 District Heating.- 11.3.2.4 Simulation Results.- 11.3.3 Conclusion.- 11.4 Changing the Fuel Mix.- 11.4.1 Natural Gas.- 11.4.2 Non-fossil Fuels.- 11.4.2.1 Nuclear Energy.- 11.4.2.2 Conclusion.- 11.4.2.3 Renewable Energy Sources.- 11.4.3 Conclusion.- 11.4.4 Simulation Results.- 11.5 Trend Extrapolations.- 11.6 A Sequence of Plausible Scenarios.- 11.7 Conclusions.- 12 A ‘Minimum Disruption’ Approach to Scenario Analysis.- 12.1 Introduction.- 12.2 The ‘Minimum Disruption’ Approach.- 12.3 Minimising Disruption of Final Demand.- 12.3.1 The Constraint on CO2 Emission Reduction.- 12.3.2 Minimising y Disruption Subject to CO2 Emission Target.- 12.3.3 Subject to CO2 Emission Target and GDP Growth Target.- 12.3.4 Subject to CO2 Emission Target and Employment Target.- 12.3.5 Subject to CO2 Emission, GDP and Employment Targets.- 12.4 Minimising Disruption of Fuel Use Coefficients.- 12.4.1 Minimising Disruption of C, with Constant Energy Efficiency.- 12.5 Minimising Disruption of Inter-Industry Trading.- 12.6 Conclusions.- 13 ‘Minimum Disruption’ Scenario Simulations.- 13.1 Introduction.- 13.2 Data Sources.- 13.3 Changes in Final Demand.- 13.3.1 Changes in Final Demand with no Other Constraints.- 13.3.2 Demand Changes with a GDP Growth Constraint.- 13.3.3 Demand Changes with an Employment Growth Constraint.- 13.3.4 Demand Changes with GDP and Employment Growth Constraints.- 13.4 Changes in Fuel Mix and Fuel Efficiency.- 13.4.1 Change in Fuel Mix with no Constraints.- 13.4.2 Change in Fuel Mix with Constant Energy Efficiency Constraint.- 13.5 Changes in the Structure of Inter-Industry Trading.- 13.6 Conclusions.- VI. Policy.- 14 Policy Conclusions for Reducing CO2 Emissions.- 14.1 Introduction.- 14.2 Major Conclusions.- 14.2.1 History.- 14.2.2 Analysis.- 14.2.3 Scenarios.- 14.3 Policy Overview.- 14.4 The Need for the Will.- References.- Author Index.- List of Figures.- List of Tables.