Analysis of Greenhouse Gas Emission Trends and Drivers

(AETAD)

Developing climate change policies requires a sound empirical analysis of past greenhouse gas emission trends as well as a theoretical economic analysis of market failures leading to excessive GHG emissions.

From the theoretical point of view, reduction of GHG emissions can be achieved in different ways, consistently with the market failure one wants to tackle, however the choice of the most effective strategy (or mix of strategies) requires an empirical analysis to test relevant socio-economic variables driving GHG emissions in different sectors.

The AETAD project ("Analysis of greenhouse gas emission trends and drivers") develops a quantitative econometric analysis to find the most relevant sector -and country- specific drivers of past GHG emissions. This yields results to interpret the socio-economic mechanisms behind the production of GHG emissions and to deliver recommendations of policy-relevance.

The approach is based on econometric models for time series (VAR, Cointegrated VAR ...) that allow to:

• ascertain if a certain variable has proved historically to be a significant driver of emissions,
• (in case of significance) measure quantitatively the impact of the driver on emissions,
• provide measures of the uncertainty associated with this relation. The uncertainty analysis allows a derivation of uncertainty bands for emissions predictions based on given scenarios on the future development of the drivers.

More info can be found in the report "Analysis of Greenhouse Gas Emission Trends and Drivers: Quantitative Econometric Analysis, G. Janssens-Maenhout, P. Paruolo, S. Martelli, 2013"