The effects of economic and political integration on power plants' carbon emissions in the post-soviet transition nations

Recent estimates suggest that the combustion of fossil fuels for the production of electricity accounts for nearly a fourth of global anthropogenic CO₂ emissions [1]. Emissions from the electricity generation sector could increase substantially in coming decades [2], given the growing energy demands and concomitant increases in the number of power plants throughout the world, especially in nations where fossil-fuel burning power plants account for a large proportion of the electricity generation sector [3]. And more broadly, analyses suggest that for the majority of the world's nations, growth in the use of renewable forms of energy has been unsuccessful so far in adequately 'displacing' fossil-fuel energy consumption [4].

With these factors in mind, an emerging body of research on fossil-fuel power plants seeks to identify how facility-level characteristics and broader contextual factors, such as national development, political circumstances and openness to the global economy, are associated with CO₂ emissions at the plant level. Many of these studies involve the analysis of large datasets of fossil-fuel burning power plants in nations throughout the world [5–7], while some instead focus on plants within just one nation, such as the United States [8–10].

Analyses of power plants in nations throughout the world provide an important lens for assessing relatively broad-based socioenvironmental relationships [6], while studies within one nation allow for more nuanced assessments of sub-national conditions that might influence plant-level emissions [8, 11, 12]. As important, we suggest, is a type of middle-level approach that is generally absent so far [13, 14], where studies are conducted of CO₂ emissions from plants within a macro-region that might consist of multiple nations that share similar sociohistorical characteristics. Country-level analyses of various human drivers of greenhouse gas emissions and other environmental outcomes have highlighted notable macro-regional differences [15–18]. Further, sustainability scientists have argued that such regionally-oriented research could aid in the creation of more effective climate change mitigation approaches, and therefore should be more prevalent in the synthesis reports and other activities of scientific bodies and policy organizations [19].

One such region that has been the focus of socioenvironmental research in recent years is the 25 'transition' nations located in Central and Eastern Europe and Eurasia. Subsequent to the collapse of the Soviet Union, in the early 1990s these countries began transitioning away from centrally planned economies with few connections to the global economy [20–22]. The recent studies on socioenvironmental relationships in these transition nations largely focus on how economic and demographic conditions influence country-level outcomes, including national CO₂ emissions. Consistent with cross-national studies on large samples of nations throughout the world [23, 24], population size and economic development are both found to increase national-level emissions in the transition nations [25, 27], while world-economic integration, such as increased exports, has been found to be associated with higher levels of CO₂ emissions in these nations as well [28, 29]. Public opinion research suggests that on average, individuals in the transition nations express higher levels of environmental concern than individuals in other regions of the world, and such concerns could be partly resulting from the unintended environmental problems associated with energy-intensive, export-oriented development [30].

With few exceptions (i.e. Azerbaijan, Moldova, Tajikistan, Uzbekistan) these nations have all increased their per person electricity consumption in recent years as they pursue various pathways of development to enhance their collective human well-being [31–33]. According to the World Bank (http://databank.worldbank.org/data/home.aspx, accessed July 21, 2016), average electric power consumption in the 25 transition nations increased from 3169 kilowatt hours per capita in the year 2003 to 3648 kilowatt hours per capita in the year 2013 (the most recent year for which these data are currently available for all 25 nations), higher than the global averages of 2491 kilowatt hours per capita (in 2003) and 3104 kilowatt hours per capita (in 2013).

For many of these nations, the transition away from centrally planned economies was followed by accession into the European Union (EU). The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia joined the EU in the year 2004, while Bulgaria and Romania joined in the year 2007. As of mid-2016, Albania and Macedonia are candidate countries for EU membership.

Prior to the post-communist transition, environmental policies in the region were relatively weak and pollution levels remained high [27, 34]. However, with EU accession, new Member States worked to harmonize national laws with existing EU environmental directives, and public officials, nongovernmental organizations, and energy policy consultants all played important roles in these efforts [35–37]. For example, a primary directive addressing CO₂ emissions was the establishment of the EU Emissions Trading System in 2005, followed by the 2009 package of EU climate and energy agreements, which set targets for greenhouse gas emissions.

In addition to the slate of environmental directives adopted by the new Member States, accession into the EU further opened up the new Member States' economies to global trade [33, 38], and higher levels of exports have been found to be associated with growth in national emissions in the transition nations due to the increased manufacture and production of goods destined for wealthier nations [28]. Nonetheless, given the scope of the constellation of EU environmental directives and policies related to climate change mitigation, energy efficiency, and other environmental sustainability concerns, we hypothesize that EU membership for transition nations should have an overall beneficial effect on lowering CO₂ emissions from fossil-fuel power plants within Member States. Thus, we expect plant-level emissions to be, ceteris paribus, lower in the transition nations that joined the EU than in those that did not. However, environmental policies are sometimes decoupled from environmental improvements on the ground [39], and in the case of EU accession, compliance would prove to be costly for the new Member States [35]. As a consequence, compliance with EU directives and significant environmental improvements were likely not immediate. Thus, we also expect plant-level emissions to be, on average, lower in the transition nations that joined the EU in 2004 relative to those that joined in 2007.

In this study, we use multilevel regression modeling techniques to analyze how facility-level characteristics and national-level factors are associated with CO₂ emissions levels for 1360 fossil-fuel power plants in the 25 transition nations in the year 2009, the most recent year in which these plant-level data are currently available. The facility-level characteristics include if the primary fuel source for the plant is coal relative to other fossil-fuels, plant size, plant age, capacity utilization rate, and heat rate. Consistent with past research on power plants [6, 8], we expect that plant-level CO₂ emissions will be positively associated with each of these characteristics. Many estimated models also include plant-level CO₂ emissions in the year 2004 to account for the extent to which prior emissions levels influence their more recent CO₂ emissions levels [40].

In the analysis we include country-level measures that allow for assessing if EU membership, and duration of membership, might be associated with plant-level CO₂ emissions. As noted above, we anticipate that on average, emissions will be lower for fossil-fuel power plants in EU member transition nations than for plants in non-member transition nations, and that emissions in 2009 were likely lower, on average, for plants within transition nations that joined the EU in 2004 relative to plants in transition nations who joined the EU in 2007.

We also assess how national-level socioeconomic factors, which were found in prior research to increase country-level emissions for the transition nations, might be associated with plant-level CO₂ emissions [26, 27]. These national-level factors include level of economic development (measured as GDP per capita), total population size, and world-economic integration (measured as exports as a percent of total GDP, also referred to as export-oriented development). Prior research on fossil-fuel plants in nations throughout the world have also found some evidence indicating that population size and level of economic development influence plant-level emissions, with population size exhibiting a positive effect, and level of economic development exhibiting a negative effect [6, 7].

The sample

Dependent variable

Level-one (facility-level) independent variables

Level-two (country-level) independent variables

Model estimation technique

We use the suite of 'mixed' commands in Stata software to estimate two-level random intercept models of plant-level CO₂ emissions [46–48]. Maximum likelihood estimation is employed to estimate the multilevel models, and for all models we estimate robust standard errors clustered by nation, which leads to relatively conservative tests of statistical significance [48]. A basic two-level random intercept model can be designated by the following [49, 50]:

$$\begin{equation} y_{ij} = \beta _0 + \beta X_{ij} + \beta X_j + \mu _{0j} + \varepsilon _{ij} \end{equation}$$

The observation y_ij is for individual i (e.g. power plant) within cluster j (e.g. country), and the individuals (power plants) comprise the first level while the clusters (countries) comprise the second level of the model. β₀ represents the overall mean intercept, μ_0j represents the cluster-specific random intercept, βX_ij represents a vector of coefficients for level-one predictors, βX_j represents a vector of coefficients for level-two predictors, and ε_ij is the disturbance term.

The following equation is for the most fully saturated multilevel random intercept model (Model 10) reported in the Results section:

$$\begin{equation} \begin{array}{*{20}l} {{\rm CO}_{{\rm 2}ij} } & = & {\beta _0 + \beta {\rm COAL}_{ij} + \beta {\rm SIZE}_{ij} + \beta {\rm AGE}_{ij} } \\ {} & {} & { + \beta {\rm CAPRATE}_{ij} + \beta {\rm HEATRATE}_{ij} } \\ {} & {} & { + \beta {\rm LAGCO}_{{\rm 2}ij} + \beta {\rm EUMEMBER2004}_j } \\ {} & {} & { + \beta {\rm EUMEMBER2007}_j + \beta {\rm GDP}_j } \\ {} & {} & { + \beta {\rm POPULATION}_j + \beta {\rm EXPORTS}_j } \\ {} & {} & { + \mu _{0j} + \varepsilon _{ij} } \\ \end{array} \end{equation}$$

where the dependent variable, CO_2ij, is plant-level CO₂ emissions, and the level-one predictors include coal as the primary fuel (βCOAL_ij), plant size (βSIZE_ij), plant age (βAGE_ij), capacity utilization rate (βCAPRATE_ij), heat rate (βHEATRATE_ij), and lagged CO₂ emissions (βLAGCO_2ij). The level-two predictors include joined EU in 2004 (βEUMEMBER2004_j), joined EU in 2007 (βEUMEMBER2007_j), GDP per capita (βGDP_j), population size (βPOPULATION_j), and exports as percent of GDP (βEXPORTS_j).

Given the small level-two sample size (i.e. 25 nations), in the reported model estimates we treat p-values of .10 or less as statistically significant. Following the suggestion of an anonymous reviewer and consistent with other multilevel studies of plant-level emissions [6], we report R² statistics for each model, which we estimated through the use of Stata's 'xtreg' group of commands for random effects models [48].

The multilevel regression model estimates are reported in table 2. Model 1 consists of coal, plant size, plant age, capacity utilization rate, and heat rate. All five independent variables have positive and statistically significant effects on plant-level CO₂ emissions in 2009. These level-one predictors are included in every estimated model. Model 2 introduces the other level-one predictor, lagged CO₂ emissions. As expected, lagged CO₂ emissions has a positive effect on emissions in 2009, and the other five level-one predictors continue to exhibit positive effects on emissions. The effects of coal, plant age, and capacity utilization rate are reduced in magnitude with the inclusion of the lagged dependent variable, while the effect of heat rate slightly increases in magnitude. The remaining eight models, which include different combinations of level-two predictors, have the same patterned structure with the level-one predictors, where the odd-numbered models (Models 3, 5, 7, 9) include coal, plant size, plant age, capacity utilization rate, and heat rate, and the even-numbered models (Models 4, 6, 8, 10) also include lagged CO₂ emissions.

Models 3 and 4 introduce the measure for EU membership, while controlling for the level-one predictors. As a reminder, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia were EU member nations in the year 2009. The estimated effect of EU membership on plant-level emissions is negative and statistically significant in both models, but smaller in magnitude in Model 4, which includes the lagged dependent variable. Overall, it appears that, on average, CO₂ emissions in 2009 were lower for fossil-fuel plants in EU member transition nations than for power plants in non-member transition nations.

GDP per capita, population size, and exports as percent of GDP are added to Models 5 and 6. The estimated effect of GDP per capita on plant-level CO₂ emissions is negative and statistically significant, while the estimated effects of population size and exports as percent of GDP are both positive and statistically significant in Model 5. However, with the inclusion of the lagged dependent variable in Model 6, the effects of GDP per capita and population size on plant-level emissions become nonsignificant. For these two models the effect of EU membership remains negative and statistically significant and smaller in magnitude when lagged CO₂ emissions is included as well.

Models 7 and 8 introduce the two more nuanced EU membership predictors: joined EU in 2004 (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) and joined EU in 2007 (Bulgaria and Romania). GDP per capita, population size, and exports as percent of GDP are included as well in Models 9 and 10. Across all four models, the estimated effect of joined EU in 2004 is negative and statistically significant and stronger in magnitude than the effect of joined EU in 2007, which, with the exception of Model 9, is also negative and statistically significant. Exports as a percent of GDP continues to have a positive effect on plant-level emissions, and the effect of population size is positive and statistically significant in Model 9, but becomes nonsignificant with the inclusion of lagged CO₂ emissions in Model 10. However, with the inclusion of the more nuanced EU membership measures, the estimated effect of GDP per capita is nonsignificant in both of these final models.

In an unreported sensitivity analysis we estimated multilevel models that also include country-level measures of urban population as a percent of total population, manufacturing as a percent of GDP, overall industrialization as a percent of GDP, and services as a percent of GDP. The effects of these additional level-two predictors on plant-level CO₂ emissions are all nonsignificant, and the estimated effects for the other predictors remain consistent with the findings reported in table 2. We also estimated sensitivity models that include a plant-level dummy-coded measure for natural gas as the primary fuel. In such models, which include both the dummy-coded measures for coal and for natural gas, liquid fossil-fuels as the plant-level primary fuel is the reference category. The estimated effect of coal remains positive and statistically significant, while the effect of natural gas is nonsignificant.

Following the suggestion of an anonymous reviewer, we estimated two additional series of multilevel models, each of which includes a country-level measure to account for climate-related conditions that could potentially influence electricity consumption and thus plant-level carbon emissions. The first series includes country-level heating degree days (HDD), a measure designed to reflect the demand for energy needed to heat a home or business to a human comfort level of 18 °C. The second series includes the midpoint latitude for each nation [7, 51], with the general assumption that since each nation in the analysis is north of the equator, higher values of (northern) latitude will be associated, in general, with colder climate conditions. We note that these two country-level measures are correlated at .886 for the 25 nations in the study. The estimated effect of both country-level climate measures on plant-level emissions are nonsignificant in all models, and the estimated effects for the other predictors remain entirely consistent with the results presented in table 2. Also at the advice of an anonymous reviewer, in additional sensitivity models we included a country-level measure of average electricity price [6], which yielded a nonsignificant effect while not substantively altering the estimated effects of the facility-level and country-level factors on plant-level emissions.

We have also estimated multilevel models for samples that systematically exclude the power plants within each of the twenty-five nations in the study. The results for all of the reduced samples are generally consistent with the reported findings for the full sample, suggesting that the analysis presented in table 2 is not overly influenced by nations with relatively large numbers of fossil-fuel power plants or those with small numbers of plants within their borders. There are two notable exceptions. First, the estimated effect of population size on plant-level CO₂ emissions becomes nonsignificant in all estimated models if the Russian Federation's 528 power plants are excluded. Second, the estimated effect of joining the EU in 2007 becomes nonsignificant or borderline statistically significant if either (1) the 27 power plants in Bulgaria or (2) the 52 power plants in Romania are excluded. This second exception is not surprising, since these are the only two transition nations that joined the EU in 2007.

Finally, we have also estimated models that include interactions for pairings of the level-one predictors and for pairings of the level-two predictors, as well as cross-level interactions between country-level and plant-level predictors. The estimated effects of all the interactions on plant-level CO₂ emissions are nonsignificant.

The 25 transition nations of Central and Eastern Europe and Eurasia provide a unique vista from which to examine the relationship between plant-level CO₂ emissions and both plant-level and national-level characteristics, as the development strategies taken by most countries in the region rapidly increased electricity consumption as they began transitioning away from centrally planned economies with limited connections to the world economy. Consistent with prior research, we found that facility-level measures such as plant size, plant age, capacity utilization, heat rate, and coal as the primary fuel source are all positively associated with plant-level emissions. Our findings further suggest that one development strategy in particular—export oriented development—might have been particularly consequential for CO₂ emissions: exports as a percent of GDP exhibits a positive association with plant-level emissions across all estimated models.

However, not all of these nations adopted the same political and economic strategies as they transitioned away from Soviet-era, centrally planned economies. For some, accession into the European Union introduced an extensive set of market and environmental reforms that shaped energy production and subsequent emissions. In terms of market reforms, the transition to a market economy upon accession into the EU led countries like Poland, Hungary, and the Czech Republic to privatize energy production and lift energy price subsidies, which incentivized energy providers and investors to pursue more efficient energy production [52]. As a consequence, energy intensities of the EU-member transition economies began to converge with other EU countries [52, 53].

In addition, accession into the EU introduced a host of environmental sustainability directives pertaining to energy efficiency, climate change mitigation, and other environmental concerns, such as the Accession Treaties of 2003, which consisted of greenhouse gas monitoring mechanisms associated with the Kyoto Protocol, and other directives that addressed greenhouse gas emissions from large facilities, including the Integrated Pollution Prevention and Control Directive (adopted in 1996 and codified in 2008), the Large Combustion Plant Directive (issued in 2001) and the National Emissions Ceiling Directive (originally agreed to in 2001). And although EU environmental directives have been unevenly implemented to some extent across Member States [54, 55], we found that transition nations that joined the EU had lower plant-level CO₂ emissions in 2009, ceteris paribus, than their non-EU counterparts in the region. We also found that the eight Member States that joined the EU in 2004 had, on average, lower plant-level emissions in 2009 than the two transition nations that joined the EU in the year 2007.

Our study is not without its limitations, such as those with CARMA's estimated data that we describe in the Methods section. We conclude by briefly highlighting two additional shortcomings. First, we are unable to ascertain which specific policies adopted in compliance with EU directives are directly associated with reduced plant-level emissions in any of the new Member States. Rather, EU accession is a proxy for a constellation of new policies, programs, and procedures that together are associated with reduced CO₂ emissions, despite the likely counter pressures of increased export-oriented development. Second, 2009 is the most recent year in which the plant-level emissions data are currently available. Therefore, we are unable to evaluate long-term effects of EU accession and other country-level and plant-level factors on plants' emissions, nor are we able to evaluate if and how the recent global economic recession might have influenced these particular socioenvironmental relationships.

This research was supported by a collaborative grant from the National Science Foundation (#1357483, #1357495, and #1357497) as well as by a student fellowship from Boston College.