Currently, global warming is considered among the most important global environmental problems. Accelerating use of fossil fuels and destruction of forests cause a significant increase in the anthropogenic greenhouse gases that lead to global warming. Among these gases, carbon dioxide (CO2) is held responsible for approximately 60% of the greenhouse effect. The Kyoto Protocol enacted in February 2005, is the first agreement which tries to limit emissions of greenhouse gases and requires a timetable for realization of the reductions. The predecessor of Kyoto Protocol, UN Conference on Environment and Development was held in 1992 and United Nations Framework Convention on Climate Change (UNFCCC), a voluntary non-binding mechanism, which entered into force in 1994, has been formed [1].
Joining UNFCCC in May 2004 and being a party to the Kyoto Protocol,1 Turkey’s contribution to CO2 emissions has been quite low; per capita CO2 emissions were 3.71 tons in 2008, much lower than the OECD average of 10.61 tons. Turkey’s share in total OECD emissions was 2.09% and in world emissions 0.90% in 2008 [2]. However, we observe a rapid increase in the emissions of greenhouse gases in recent years. Greenhouse gas emissions excluding emissions/removals from land use, land-use change and forestry (including emissions/removals from land use, land-use change and forestry) amounted to 170 (127) million tons in 1990 and 297 (223) million tons in 2004 which corresponded to 74.4% (75.9%) increase between these years. Both of these percentage increases denoted that Turkey had the highest increase in emissions among 41 Annex I Parties2 (UNFCCC, 2007). Carbon dioxide emissions excluding emissions/removals from land use, land-use change and forestry (LULUCF) (including emissions/removals from LULUCF) amounted to 140 (96) million tons in 1990 and 242 (168) million tons in 2004 which corresponded to 73.3% (74.7%) increase between these years. Turkey had the highest percentage increase in carbon dioxide emissions excluding emissions/removals from LULUCF, and came third after Latvia and New Zealand in terms of the percentage increase in carbon dioxide emissions including emissions/removals from LULUCF [3].
In the Turkish economy, industry, with a share of 26%, is the second largest contributor to CO2 emissions in 2002 [4]. Thus, having a better understanding of the emissions as a result of industrial production, how they change, and sources of these changes will have important policy implications in terms of reducing CO2 emissions. In this study, we identify the relative effects of different factors on the changes in CO2 emissions for Turkish manufacturing industry for the period 1995–2001. In the literature, there are alternative studies that examine the relationship among energy consumption, economic activity and environmental pollution in different context.3 One of the frequently employed methods to analyze the effects of CO2 emissions on the economy is “decomposition analysis”. In its broadest sense, the decomposition analysis could be defined as separating an identity into its components. According to Rose and Miernyk [7], the change in a variable could be explained by changes in the components of that variable. The decomposition could be as simple or as complex as possible depending on the aim of the analysis and the availability of data. There are different methods of decomposition analysis. In this study Log Mean Divisia Index (LMDI) method developed by Ang [8] is utilized to investigate the leading factors that cause changes in Turkish manufacturing industry’s CO2 emissions.
There is a vast literature on decomposition analysis about CO2 emissions.4 However, applications of these techniques on the Turkish economy are quite limited. One such example is Karakaya and Özçağ [10]. In this study, for the period 1973–1999, the growth and population effects are identified as the main contributors to CO2 emissions in the Turkish economy. Fossil-fuel intensity (share of fossil fuels in total energy) and conversion-efficiency (primary energy required to deliver energy for final consumption) effects follow these. The authors claim that increasing energy demand due to economic growth in the Turkish economy has been satisfied increasingly by fossil fuels and decreasingly by renewable sources.
Lise [11] reaches similar conclusions. CO2 emissions for the period 1980–2003 are analyzed for four aggregated sectors; agriculture, industry, transportation and services. In this study, refined Laspeyres method is used. The author concludes that while the growth of the economy (scale effect) is responsible for most of the CO2 emissions, the carbon intensity and composition effects also contribute to CO2 emissions. Energy intensity effect on the other hand is only responsible for a modest reduction in CO2 emissions.
Tunç et al. [12] use the same method as the current study to decompose changes in CO2emissions of the Turkish economy for the period 1970–2006. In their study, Turkish economy is divided into three aggregated sectors (agriculture, industry and services) and energy sources are divided into four groups (solid fuels, petroleum, natural gas and electricity). It is found that the main determinant of the changes in CO2 emissions of the Turkish economy is the economic activity. Their findings also show that share of industry in CO2 emissions increases from 23.8% in 1970 to 45.2% in 2006. Therefore, industry is found to be the engine of the rapid increase in CO2 emissions in the Turkish economy.
For this reason, in the current study we focus on the manufacturing industry to understand the reasons behind this increase in CO2 emissions in detail. One of the novelties of the current study is the analysis of the manufacturing industry at the ISIC revision 2 four digit industry level. Our analysis covers 57 sectors and five fuel groups used by these sectors. Availability of fuel consumption data of the manufacturing industry restricts the time scope of the analysis; fuel consumption data is available only for the period 1995–2001 at this detail. All of the previous studies done for the Turkish economy consider the CO2 emissions of Turkey at aggregate level. Therefore, our analysis is unique in its approach in terms of the level of disaggregation and the decomposition method used. The level of disaggregation in this study will be important for policy makers in identifying the sectors that will be affected the most by environmental laws regarding emission reduction.
The study is composed of five sections. Following the introduction, in the second section the decomposition method utilized in this study is discussed. The data set is introduced in the third section. Empirical results are presented in the fourth section and the last section concludes the study, as usual.
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