Measuring CO2 emission reduction potential using a cost approach

Kassoum Ayouba, Jean-Philippe Boussemart and Raluca Parvulescu

No 2023-EQM-02, Working Papers from IESEG School of Management

Abstract: Departing from traditional approaches based on treating carbon dioxide (CO2) emissions as a bad output, thus relying on the weak disposability assumption, CO2 emissions are considered in this paper as a cost to minimize. We extend the Coelli et al. (2007) pollution cost approach preserving the materials balance condition by considering that peers are evaluated, besides their energy use, on their carbon intensity per total energy consumption. The proposed methodology is applied to estimate the extent to which a selection of 33 OECD and BRICS countries can reduce their CO2 emissions given their Gross Domestic Product and population over the period 2001-2019. Our results indicate that the period mean reduction potential for CO2 emissions of 53% (i.e., an efficiency level of 47%) can be decomposed into a 36% reduction in the energy intensity and a 27% decrease in the carbon intensity of energy (i.e., efficiency of 64% and respectively, 73%).

Keywords: Carbon dioxide emissions; Emission-generating technologies; Pollution cost; Energy use; Activity model; Data envelopment analysis (DEA) (search for similar items in EconPapers)
JEL-codes: C61 D24 Q40 Q52 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2023-03
New Economics Papers: this item is included in nep-des, nep-eff, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:e202304

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