The Logarithmic Mean Divisia Index (LMDI) method of complete decomposition is used to examine the role of three factors (electricity production, electricity generation structure and energy intensity of electricity generation) affecting the evolution of CO2 emissions from electricity generation in seven countries. These seven countries together generated 58% of global electricity and they are responsible for more than two-thirds of global CO2 emissions from electricity generation in 2005. The analysis shows production effect as the major factor responsible for rise in CO2 emissions during the period 1990–2005. The generation structure effect also contributed in CO2 emissions increase, although at a slower rate. In contrary, the energy intensity effect is responsible for modest reduction in CO2 emissions during this period. Over the 2005–2030 period, production effect remains the key factor responsible for increase in emissions and energy intensity effect is responsible for decrease in emissions. Unlike in the past, generation structure effect contributes significant decrease in emissions. However, the degree of influence of these factors affecting changes in CO2 emissions vary from country to country. The analysis also shows that there is a potential of efficiency improvement of fossil-fuel-fired power plants and its associated co-benefits among these countries.
There is growing scientific evidence of an increase in greenhouse gas (GHG) concentrations in the atmosphere since pre-industrial times contributing to rising global temperatures and to changes in climate patterns. The primary source of these increased atmospheric GHG concentrations has been the rising fossil-fuel use and other human activities. Since 1750, it is estimated that about two-thirds of anthropogenic CO2 emissions—the most important anthropogenic GHG—have come from fossil-fuel burning and in recent years these emissions have continued to increase.
Power generation—which includes both electricity and heat generation—is one of the major sources of CO2 emissions from fossil-fuel combustion. For example, the share of power generation in global energy-related CO2 emissions has increased from 36% (8.8 Gt CO2) in 1990 to 41% (11.0 Gt CO2) in 2005 and if the current trends continues this share is projected to increase to 45% (18.7 Gt CO2) in 2030 (IEA, 2007a). Therefore implications of power generation on climate-change mitigation have become an increasingly important topic for researchers and policymakers. However, establishing any effective policies and measures to reduce CO2 emissions from this sector requires understanding of trends and factors affecting these emissions. Many factors influence these emissions, including socio-economic developments, structural (fuel-mix) change, technological change and institutional frameworks. Few studies have attempted to address some of these issues in the past. For example, Shrestha and Timilsina (1996) studied these factors in power sector for several Asian countries covering fossil fuels only, while Ang et al. (1998) and Ang and Choi (2002)studied these factors in power sector for South Korea. In this study, these factors affecting the changes in CO2 emissions explicitly from electricity generation over the period 1990–2005 are analyzed for seven major Asia-Pacific and North American countries: Australia, Canada, China, India, Japan, South Korea (hereafter Korea) and the United States (US).1Besides, the selection of countries also reflects the differences in their economic development and energy use patterns. These seven countries (hereafter APP countries) together represent about half of the world's economy, population and energy use (UN, 2006; IEA, 2007b, IEA, 2007c). In 1990, APP countries together emitted over two-thirds of global energy-related CO2 emissions and this share has increased to 78% in 2005 (IEA, 2007d). Excluding Australia, these six countries are also the top 10 world CO2 emitting countries in 2005.
In recent years, decomposition analysis technique provides widely used analytical tools for studying the factors affecting changes in energy and gas emissions. There are two commonly used decomposition analysis techniques in the literature: Index Decomposition Analysis (IDA) that uses aggregate data at the sectoral level and Structural Decomposition Analysis (SDA) that uses input–output tables. Among different IDA techniques, Ang (2004)recommended Logarithmic Mean Divisia Index (LMDI) method over other IDA methods because this method has several desirable advantages including time independence, ability to handle zero values and consistency in aggregation. Few recent studies (Chung and Rhee, 2001; Lenzen, 2006; Rhee and Chung, 2006; Wood and Lenzen, 2006) raised the issues of negative values and large number of zero values in the data set in the application of LMDI method. However, an analysis by Ang and Liu (2007a) shows that replacing zero values with sufficiently small positive value (e.g., δ−150) would lead to satisfactory decomposition results. In the case of negative values, Ang and Liu (2007b) proposed a procedure to deal with negative values for the LMDI method. In this paper, the IDA technique using additive LMDI method is adopted.
2. Overview of electricity generation and CO2 emissions in APP countries
Over the past 15 years, total electricity generation in APP countries as a whole grew by average 3.7% per year compared to 3.2% per year worldwide, 1.5% per year in OECD Europe as a whole and 6.8% in Developing Asia (DA) as a whole (Table 1). Between 1990 and 2005, three countries—China (9.7% per year), Korea (8.8% per year) and India (6.1% per year)—experienced the fastest rate of electricity generation growth while this growth is modest in industrialized countries ranging from 1.7% per year in Canada to 2.8% per year in Australia. It is noteworthy that three countries (China, Japan and the US) combined accounted for 80% of APP countries combined and 46% of global electricity generation in 2005. With the exception of Japan, the share of fossil-fuel-fired power plants in total electricity generation in six countries has increased over the past 15 years with Korea and India showing the largest increase. Although the share of coal use in total electricity generation has increased between 1990 and 2005, the reason for decline in Japan's fossil-fuel share is mainly due to increase in nuclear share and decrease in oil share in total electricity generation. In 2005, about 82% of total electricity in China and India is generated from fossil-fuel-fired power plants—which is higher compared to world average (67%) and OECD Europe average (53%)—followed by the US (73%), Australia (67%), Japan (63%), Korea (61%) and Canada (26%). The reason for relatively low share in Canada is mainly due to dominant shares of hydro (58%) and nuclear (15%) power plants in total electricity generation. Coal use dominated in total fossil-fuel-based electricity generation in APP countries ranging from 45% in Japan to almost 97% in China in 2005. Between 1990 and 2005, oil use in total electricity generation however continues to decline in six countries except in India, while gas use continues to increase in all APP countries.
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