Index decomposition analysis applied to CO₂ emission studies

Abstract

Index decomposition analysis (IDA) was first extended from energy consumption to energy-related CO₂ emission studies in 1991. Since then many studies have been reported covering various countries and emission sectors. However, unlike the case of energy consumption studies, a comprehensive literature survey that focuses specifically on emission studies has so far not been reported. In this paper, we attempt to fill this gap by reviewing 80 papers appearing in peer-reviewed journals from 1991 to 2012 in this application area. The first part of this paper deals with the developments with regard to the IDA approaches used by researchers, and the scope and focus of their studies. In the second part, the empirical results reported in the surveyed studies are analyzed, consolidated, and presented by emission sector. The objective is to reveal the relative contributions of key effects on changes in the aggregate carbon intensity, and this is done by emission sector and by country. The findings of both parts are useful in understanding the development of IDA in the application area of emission study, as well as the key drivers of aggregate carbon intensities in the past and their possible future developments.

Introduction

Index decomposition analysis (IDA) has been widely used in studies dealing with energy consumption since around 1980. In many of these studies, the focus is to quantify drivers behind changes in an aggregate of interest, such as energy consumption or the aggregate energy intensity of a particular sector. The drivers of interest include the well-known activity structure change and energy intensity change. Over the years several hundred peer-reviewed journal papers have been published in this topic. Different IDA methods or ways of accounting were adopted by researchers in the 1980s and 1990s. Convergence took place in the 2000s and the approach now used by researchers is fairly standard. Relevant literature review can be found in Ang and Zhang (2000), Ang (2004), Liu and Ang (2007), and Ang et al. (2009).

The original impetus behind IDA studies was linked mainly to energy efficiency, and indirectly to energy security, in the aftermath of world oil crises in the 1970s. In this aspect, there was little change until around 1990. After 1990, with climate change and greenhouse gas (GHG) emissions becoming a global issue, IDA has been extended to study GHG emissions and in particular energy-related CO₂ emissions. In some recent years, there were actually more IDA studies, such as in peer-reviewed journal papers, that deal with carbon emissions than with energy consumption. However no comprehensive literature survey on emission studies similar to that for energy has so far been reported since the study by Ang and Zhang (2000).¹ One of the objectives of this paper is to fill this gap. In this study, a literature survey is conducted and the findings are presented from 2 Main Features and Developments, 3 Methodological Issues, 4 Compilation of Decomposition Cases. A specific area of interest is the differences between emission studies and energy studies in both the methodological and application fronts.

Another objective is to analyze the empirical results reported in previous emission studies, in particular the relative contributions of the effects of the defined factors in the IDA identity. Essentially, this means identifying the key drivers behind changes in the aggregate CO₂ emissions or intensity, and studying their relative importance. The study will cover different emission sectors and countries, with and without temporal changes taken into account. The results are compared and the findings are presented from 5 Drivers of Carbon Intensity Change: Non-Temporal Features, 6 Drivers of Carbon Intensity Change: Temporal Features, 7 The Electricity Generation Sector. Of particular interest are whether there were similar features or developments among sectors and among countries, and whether there were variations over time for a specific sector in a country or among countries. The findings will have implications on how emissions will evolve in future in general, such as for economies at different stages of development. The study covers economy-wide CO₂ emissions, emissions for four final energy consumption sectors (industry, transportation, residential, and service), and emissions from the electricity generation sector. We make extensive use of the information and findings reported in the literature. These are mostly unrelated studies and an attempt is made to reconcile the decomposition results and present them in a meaningful manner. This, to some extent, dictates how the surveyed results are compiled, analysed and presented. Finally, Section 8 concludes.