The environmental Kuznets curve of CO2 emissions in the manufacturing and construction industries: A global empirical analysis

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Abstract

The manufacturing and construction industries have significantly contributed to the increase of carbon dioxide (CO2) emissions. Environmental Kuznets curve (EKC) hypothesis is widely leveraged to analyze the peak of CO2 emissions, which is considered as a pivotal step for the effective CO2 emission reduction in previous studies. This study tests the EKC hypothesis using the data of CO2 emissions of manufacturing and construction industries from 121 countries throughout 1960–2014, and turning points (TPs) are calculated for the countries where EKC hypothesis is validated. The results show that the EKC hypothesis was validated by 95 out of 121 countries, among which, 13 countries have not reached any of the three TPs, 11 countries have reached the first-step TP (TPCI), 21 countries have reached the second-step TP (TPPC), and 50 countries have reached the third-step TP (TPTC). Moreover, the result of examination of the EKC existence at four income levels indicates the higher-income nations own a higher proportion of countries validates the EKC hypothesis and reach the TP. These findings help policy-makers analyze the TP status quo and generate step-wise strategies for national CO2 emission reduction of manufacturing and construction industries.

Introduction

The significant growth of the global economy over the past few decades has brought many benefits such as increase of income, development of technology and better of social-welfare. It was reported that the world gross domestic product (GDP) has increased 59 times from 1.367 trillion dollars in 1960 to 80.684 trillion dollars in 2017 (World Bank, 2018). Nevertheless, the dramatic economic development is based on the sacrifice on the environment degradation (Dong et al., 2018b; Zhang et al., 2019b). According to the 5th assessment report of the Intergovernmental Panel on Climate Change (IPCC), the average global surface temperature has increased by 0.85 °C since the industrial revolution (IPCC, 2013). More seriously, the report also figures that this number may range from 0.9 to 5.4 °C in this century. Nowadays, the global warming becomes the worldwide concern such like the 2015 Paris climate conference (La Notte et al., 2018; Shuai et al., 2017).

It is well-known that the growth of carbon dioxide (CO2) emission is the main determining factor leading to global warming (Dong et al., 2019b; Wu et al., 2018; Zhang et al., 2018). The report by World Bank revealed that the global CO2 emission has nearly tripled from 9385.8 million tons to 36,138.3 million tons throughout 1960 to 2014 (World Bank, 2018). Specifically, the manufacturing and construction industries are critical economic industries and also significant sources of CO2 emissions of global economy. As the pillar industries, the manufacturing and construction industries play a critical role in the global economy, for example, these two industries made up 41.03% of the global GDP in 2014 (World Bank, 2018). Moreover, manufacturing and construction industries are highly resource-consuming and emission-intensive due to the low technology level. For instance, the construction industries account for nearly 40% of primary energy utilization (Huang et al., 2018). It was reported by World Bank that manufacturing and construction industries are the second largest carbon emitter which consists of nearly 19.96% of CO2 emission in 2014 after transportation industry across global countries (World Bank, 2018). It is noteworthy that the growth of CO2 emission is mainly caused by economic growth (Chen et al., 2019a; Ma et al., 2018; Pazienza, 2019; Xu and Lin, 2017b). Therefore, it is urgent to keep the balance between economic development and CO2 emission for manufacturing and construction industries across global countries.

The nexus between CO2 emission and economic growth has been intensively analyzed over the past two decades by validating Environmental Kuznets Curve (EKC) hypothesis (Hui et al., 2018; Ma et al., 2019). The EKC hypothesis is a useful way to simulate the evolution of CO2 emission with economic growth (Jiang et al., 2019). Turning point (TP) in EKC hypothesis, if any, would be very useful for policymakers. The research on CO2 emission TPs in different countries, where CO2 emission whether having peaked, could help governors meeting CO2 emission reduction target sooner with the lower cost. Keeping up with this discussion, different countries present different CO2 emission characteristics (Dong et al., 2019a). According to the different CO2 emission characteristics, the research by Shen et al. (2018) and Bai et al. (2016) pointed that there are three types of CO2 emission EKC, namely EKC of carbon intensity, EKC of carbon emission per capita and EKC of total carbon emission respectively. More interestingly, the turning points of the three EKCs are reached in a successive pattern. The TP of carbon intensity EKC reaches first, follows by TP of carbon emission per capita, and TP of total carbon emission is achieved lastly. If this pattern is validated in manufacturing and construction industries, it provides precise benchmark reference for the decision makers to promote global low-carbon development.

To date, many research studies have been conducted in evaluating CO2 emission EKC but focusing on national and regional levels (Ganda, 2019; Hameed et al., 2019; Khan et al., 2019; Liu et al., 2019; Shahbaz et al., 2019; Sugiawan and Managi, 2016; Zhang et al., 2019a). A few studies have presented the evaluation on CO2 emission EKC with focusing on manufacturing and construction industries. For example, Ahmad et al. (2019) in China's construction sector, Xu and Lin (2017a) in China's iron and steel industry, Ma and Cai (2019) on Chinese commercial buildings, and Xu and Lin (2016) in China's manufacturing industry of provincial region. In line with this, though the CO2 emission EKCs have been discussed extensively, studies related to the CO2 emission for the manufacturing and construction industries and examination of three types of CO2 emission EKCs at global level are largely ignored. To that end, this research attempts to (1) test three kinds of CO2 emission EKC hypothesis for the manufacturing and construction industries in 121 countries throughout 1960–2014, and (2) identify these three types of TPs (i.e. TP of carbon intensity (TPCI), TP of carbon emission per capita (TPCP), TP of total carbon emission (TPTC) of individual countries where the EKC hypothesis is validated. The innovation and contribution of this research are mainly in two prospects compared with other researches. This study aims to analyze the CO2 emission EKC's TP of manufacturing and construction industries in 121 individual countries and provide detailed country-by-country analyses. These findings uncover theoretical TP in the manufacturing and construction industries, which is useful for policymaking and practitioners to adopt effective measures to promote global low-carbon economy development. Second, this paper presents an innovative way to analyze the TPs of CO2 emission EKC by simultaneously considering economic performance and three carbon emission characteristics (i.e. carbon intensity, carbon emission per capita and total carbon emission) in manufacturing and construction industries. By doing so, the decision-makers could precisely realize the position of country in the curve, which help guide global carbon emission reduction in the manufacturing and construction industries.

Section snippets

Literature review

There is plenty literature focusing on estimation of the CO2 emission EKC existence, as shown in Table 1. The results reported in Table 1 demonstrate that previous studies have evaluated the CO2 emission EKC within a specific country and the scope of a region. For example, Liu et al. (2019) analyzed the effect of income inequality on CO2 emission across US states based on panel Autoregressive Distributive Lag (ARDL) and quantile regression models, suggesting that higher income inequality

EKC models

It is widely acknowledge that there are three types of EKCs between CO2 emission and economic growth (per capita GDP): (a) EKC of CO2 emission intensity (shown in Fig. 1a); (b) EKC of CO2 emission per capita (shown in Fig. 1b); and (c) EKC of total CO2 emission (shown in Fig. 1c) (Shen et al., 2018). Based on these three types of EKCs, it can be found that there are three types of TPs, namely, TP of CO2 emission intensity (TPCI) in Fig. 1a, TP of CO2 emission per capita (TPCP) in Fig. 1b, and

Results and discussion

By applying the EKC models (1)–(5) descripted in Section 3.1 and the four variables data described in Section 3.2, the results of three types CO2 emission EKCs of manufacturing and construction industries for 121 countries are shown in Appendix. As mentioned in Section 3.1, after validating the EKC models, a TP could be identified based on the inverted U-shaped EKC curve. Therefore, according to the three types CO2 emission EKCs, the results of manufacturing and construction industries TYCI, TY

Conclusions

This study calculates three carbon emission characteristics TP from manufacturing and construction industries in 121 countries over the period 1960 to 2014 by using EKC models. After comparing the three kinds of TPs of individual countries, this study identified a step-wise TP for different countries, i.e. reaching the TPCI is the first step, reaching the TPCP is the second step and reaching the TPTC is the third step. It was also found that EKC hypothesis was accepted by 95 out of 121

Acknowledgments

This work has been supported by Fundamental Research Funds for the Central Universities (No. 2019CDSKXYJSG0041), National Planning Office of Philosophy and Social Science Foundation of China under Grant (No. “17ZDA062”) and Chongqing Federation of Social Science (Nos. “2018 CDJSK03PT17”, “2018ZD04” and “2019 CDJSK03PT06”).

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